For more information, contact:

Cathy Kawakami,
Advanced Energy Industries, Inc.

Advanced Energy Announces 2006 First Quarter Financial Results

Sales Up 17%, Operating Income Up 111% Compared to 2005 Fourth Quarter

FORT COLLINS, Colo., April 26—Advanced Energy Industries, Inc. (Nasdaq: AEIS) today announced financial results for the first quarter ended March 31, 2006.

Sales were $94.0 million for the first quarter of 2006, up 16.9% compared to $80.4 million in the fourth quarter of 2005, and up 14.3% compared to $82.2 million in the first quarter of 2005. Gross profit was $38.6 million, or 41.0% of sales, compared to $30.2 million, or 37.6% of sales for the fourth quarter of 2005, and $27.3 million, or 33.2% of sales in the first quarter of 2005.

First quarter 2006 income from operations was $13.2 million, or 14.0% of sales, an increase of 111.3% compared to $6.2 million, or 7.8% of sales, in the fourth quarter of 2005. This compares to first quarter 2005 income from operations of $2.5 million, or 3.1% of sales. First quarter 2006 income from operations includes $641,000 of stock-based compensation expense due to the adoption of SFAS 123(R). First quarter 2005 income from operations includes $1.3 million of restructuring charges related to employee severance and termination costs.

First quarter 2006 net income was $12.8 million, or $0.28 per diluted share, compared to net income of $10.0 million, or $0.22 per diluted share in the fourth quarter of 2005, and $734,000 in the first quarter of 2005, or $0.02 per diluted share. First quarter 2006 net income includes a $1.4 million gain, primarily related to the sale of equity securities, which favorably impacts diluted earnings per share by approximately $0.02. First quarter 2006 net income reflects a tax rate of 15%, which is lower than the Company's anticipated tax rate of 20% due to the mix of foreign and domestic income in the respective taxing jurisdictions and the utilization of the net operating loss carryforwards which had valuation allowances recorded against them.

Dr. Hans Betz, president and chief executive officer of Advanced Energy, said, "Our first quarter performance demonstrates a strong demand environment for our innovative power generation solutions. The sequential sales increase was primarily driven by sales to the semiconductor industry. Shipments of our Pinnacle(R) DC power supply for use in semiconductor and Generation 5 flat panel display applications were at near record levels. Today, we announced a significant win for our Crystal(R) AC power solutions for a major architectural glass retrofit opportunity that is expected to drive increased sales to this market over the next twelve months. Outside of our core markets, we also marked another milestone in our objective to penetrate the solar cell manufacturing market, winning a new position at ECD Ovonics to provide process power using our Cesar(R) RF generators and VarioMatch(TM) matching networks."

Dr. Betz continued, "We also continue to make significant progress in our financial performance. We were encouraged by the operating performance as our factory in Shenzhen, China is fully ramped, and gross margin this quarter was at its highest level in five years. Based on the continued strength in end market demand, we currently expect second quarter 2006 sales to be in the range of $98 million to $102 million. We anticipate earnings per share in the range of $0.27 to $0.29."

First Quarter 2006 Conference Call

Management will host a conference call today, Wednesday, April 26, 2006 at 5:00 pm Eastern time to discuss Advanced Energy's financial results. You may access this conference call by dialing 888-713-4717. International callers may access the call by dialing 706-679-7720. For a replay of this teleconference, please call 706-645-9291, and enter the pass code 7779721. The replay will be available through May 3, 2006. There will also be a webcast available on the Investor Relations webpage at

About Advanced Energy

Advanced Energy is a global leader in the development and support of technologies critical to high-technology, high-growth manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, solar cells, architectural glass, and other advanced product applications.

Leveraging a diverse product portfolio and technology leadership, Advanced Energy creates solutions that maximize process impact, improve productivity and lower the cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, and plasma and ion beam sources for original equipment manufacturers (OEMs) and end-users around the world.

Advanced Energy operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, Advanced Energy is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, please visit our corporate website:

This press release contains certain forward-looking statements, including the company's expectations with respect to Advanced Energy's financial results for the second quarter of 2006 as well as other matters discussed in this news release that are not purely historical data, are forward-looking statements. Forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to: the volatility and cyclicality of the industries we serve including the semiconductor capital equipment and flat panel display industries, the timing of orders received from our customers, our ability to realize cost improvement benefits from the manufacturing initiatives underway, unanticipated changes to our effective tax rate, and other risks described in Advanced Energy's Form 10-K, Forms 10-Q and other reports and statements, as filed with the Securities and Exchange Commission. Forward-looking statements are made and based on information available to us on the date of this press release. We do not assume, and expressly disclaim, any obligation to update this information. These reports and statements are available on the SEC's website at Copies may also be obtained from Advanced Energy's website at or by contacting Advanced Energy's investor relations at 970-221-4670. The company assumes no obligation to update the information in this press release.


    (in thousands, except per share data)

                                                    Three Months Ended
                                                   March 31,      December 31,
                                               2006        2005        2005

    Sales                                    $93,950     $82,176     $80,387
    Cost of sales                             55,400      54,854      50,196
    Gross profit                              38,550      27,322      30,191

    Operating expenses:
         Research and development             10,459      10,255       9,635
         Selling, general and
          administrative                      14,405      12,725      13,671
         Amortization of intangible
          assets                                 477         547         481
         Restructuring charges                    29       1,262         166
              Total operating expenses        25,370      24,789      23,953

    Income from operations                    13,180       2,533       6,238

    Other income (expense), net                1,833      (2,087)        123
    Income from continuing operations
     before income taxes                      15,013         446       6,361
    Provision for income taxes                (2,252)       (529)     (1,330)
    Income (loss) from continuing
     operations                               12,761         (83)      5,031

    Gain on sale of discontinued assets           --          --       5,210
    Results of discontinued operations            --         817        (216)
    Provision for income taxes                    --          --          --

    Income from discontinued operations           --         817       4,994

    Net income                               $12,761        $734     $10,025

    Net income (loss) per basic share
    Income (loss) from continuing
     operations                                $0.29         $--       $0.11
    Income from discontinued operations          $--       $0.02       $0.11
    Basic earnings per share                   $0.29       $0.02       $0.23

    Net income (loss) per diluted share
    Income (loss) from continuing
     operations                                $0.28         $--       $0.11
    Income from discontinued operations          $--       $0.02       $0.11
    Diluted earnings per share                 $0.28       $0.02       $0.22

    Basic weighted-average common shares
     outstanding                              44,571      32,755      44,416

    Diluted weighted-average common
     shares outstanding                       45,004      32,878      44,902

    (in thousands)

                                                 March 31,        December 31,
                                                    2006              2005

    Current assets:
         Cash and cash equivalents                 $67,965           $52,874
         Marketable securities                       8,815             6,811
         Accounts receivable, net                   72,240            68,992
         Inventories                                55,940            56,199
         Other current assets                        4,700             6,773
    Total current assets                           209,660           191,649

    Property and equipment, net                     37,502            39,294

    Deposits and other                               1,877             3,808
    Goodwill and intangibles, net                   69,716            69,843
    Customer service equipment, net                  1,848             2,407
    Deferred income tax assets, net                  5,059             3,116

    Total assets                                  $325,662          $310,117


    Current liabilities:
         Trade accounts payable                    $21,567           $22,028
         Other accrued expenses                     23,928            23,977
         Current portion of capital
          leases and senior borrowings               1,601             2,011
    Total current liabilities                       47,096            48,016

    Long-term liabilities:
        Capital leases and senior
         borrowings                                  2,028             2,179
        Other long-term liabilities                  2,556             2,492
    Total long-term liabilities                      4,584             4,671

    Total liabilities                               51,680            52,687

    Stockholders' equity                           273,982           257,430
    Total liabilities and stockholders' equity    $325,662          $310,117

    (in thousands)

                                                 Three Months Ended March 31,
                                                     2006              2005

     ACTIVITIES                                    $14,767           $18,140

    NET CASH USED IN INVESTING ACTIVITIES             (728)           (3,355)

     FINANCING ACTIVITIES                              879            (1,051)

    EFFECT OF CURRENCY TRANSLATION ON CASH             173              (772)
    INCREASE IN CASH AND CASH EQUIVALENTS           15,091            12,962
    CASH AND EQUIVALENTS, beginning of period       52,874            38,404
    CASH AND EQUIVALENTS, end of period            $67,965           $51,366