Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Advanced Energy Industries, inc (NASDAQ:AEIS)
Q3 2021 Earnings Call
Nov 8, 2021, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings. Welcome to Advanced Energy's Third Quarter 2021 Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded.

At this time, I will now turn the conference over to Mr. Edwin Mok, Vice President, Strategic Marketing and Investor Relations. You may now begin, sir.

Edwin Mok -- Vice President, Strategic Marketing and Investor Relations

Thank you, operator. Good afternoon, everyone. Welcome to Advanced Energy third quarter 2021 earnings conference call. With me today are Steve Kelley, our President and CEO; and Paul Oldham, our Executive Vice President and CFO. If you have not seen our earnings press release, you can find on our website at ir.advancedenergy.com. There you also find the third quarter slide presentation.

Before I begin, I'd like to mention that we will be participating at several investor conferences in the coming months. Let me remind you that today's conference call contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially and are not guarantees of future performance. Information concerning these risks can be found in our SEC filings. All forward-looking statements are based on management estimates as of today, November 8, 2021, and the company assumes no obligations to update them. Medium and long-term targets presented today should not be interpreted as guidance.

On today's call our financial results will be presented on a non-GAAP financial basis unless, otherwise specified. Excludes from non-GAAP results are amortization, stock compensation, integration and transition costs, unrealized foreign exchange gains or losses and restructuring items. Our detailed reconciliation between GAAP and non-GAAP measures can be found in today's press release.

With that, let me pass the call to our President and CEO, Steve Kelley.

Steve Kelley -- President and Chief Executive Officer

Thank you, Edwin. Good afternoon, everyone, and thanks for joining the call.

In the third quarter, we delivered results above the midpoint of our guidance. Stronger factory output pushed our revenue, gross margin and earnings per share to the upper part of our guidance range. Demand remains extremely robust across all of our target markets. In addition, our new products continued to be well received by customers. We depend on AE's innovative technologies to achieve their efficiency, power density and precision power goals. We remain focused on the key factors driving our long-term success. Industry-leading innovation, strong customer relationships, outstanding quality, a strong leadership team, and a culture focused on results and speed.

Over the course of the year, we have taken substantial steps to increase the capabilities of the Advanced Energy leadership team. Our latest addition to the team, Eduardo Bernal, joined the company in September as our EVP and COO. Eduardo has an impressive record of achievement in the semiconductor industry with specific expertise in operations and supply chain management. Before joining Advanced Energy, he led the global back-end manufacturing organization at NXP Semiconductors. He was able to drive significant performance improvements over a multi-year period. Eduardo will be based in Singapore and Malaysia, and we are delighted to have him on board.

Now I'd like to touch on our supply chain challenges, specifically shortages of key ICs. These shortages continue to constraint shipments and limit our financial performance. We are working diligently and with a high sense of urgency to mitigate the shortages, expediting suppliers, qualifying replacement parts, and where necessary redesigning boards to eliminate problematic ICs. Many of our customers are playing an important role in the mitigation efforts by expediting qualifications of new parts and by joining discussions with our key suppliers. We are seeing some incremental progress on the products front, as reflected in our third quarter performance. However, the overall supply environment remains dynamic. With little slack in the supply chain, the effects of manufacturing or shipping disruptions quickly ripple through to the end customer.

Given the dynamic nature of the supply chain issues, we are taking a relatively conservative approach to our financial forecast. However, given the amount of pent-up demand for our products, as indicated by our record backlog, we see considerable revenue and profit upside tied to the successful mitigation of our supply constraints. Despite the supply chain issues, we have maintained a full factory workforce in order to maximize our surge capacity. As an additional measure, we plan to keep our Shenzhen factory open into the second quarter of 2022.

Now I'd like to provide more color on each of our target markets. As I mentioned earlier, demand is very robust across all of our markets. The macro trends are solid, and customers are designing in our new products. In the Semiconductor Equipment space, our customers are forecasting strong unit growth in 2022 across a wide range of technologies. We are well positioned to benefit from this growth given our strong position in both current generation and next generation conductor etch equipment. In addition, we expect to gain share in the coming years in plasma power applications, particularly, in areas, where we currently have a minor presence such as dielectric etch and remote plasma source.

Our new eVoS and MAXstream products for those applications are being evaluated and qualified by multiple customers, and are expected to go into mass production in the coming years. In the third quarter, we secured several strategic wins at Korean and Chinese OEM customers. We also won an important remote plasma source design.

In Medical, we secured several wins in life science and therapeutic applications, and a strategic win in ultrasound. In Industrial, we secured a high profile win in the thin film area. We received a large order for an indoor farming project. We also won several proprietary designs and power control in thermal sensing applications. In Datacenter Computing, Telecom and Networking, we continue to see strong demand as multi-year digital transformation trends drive sustained infrastructure investments. In the third quarter, we secured a next generation hyperscale design with the solution featuring power density roughly double that of current generation products. We also won high value designs in telco edge, storage, and network routing applications.

Before closing, I'd like to summarize our key messages. First, demand for our products is robust, amid broad customer acceptance of our new products and technologies. Second, we are working diligently to mitigate the impact of supply chain constraints. Third, we expect pent-up demand for our products to drive several quarters of revenue upside above current run rate, as supply chain issues are successfully addressed. And finally, we are positioning the company for sustained revenue growth with a strong line up of differentiated products, targeting the right markets.

Paul will now review our financial results and provide detailed guidance.

Paul Oldham -- Executive Vice President and Chief Financial Officer

Thank you, Steve. And good afternoon, everyone.

In the third quarter, we delivered revenue and earnings above the midpoint of our guidance. Total revenue of $346 million declined 4% sequentially as our ability to ship products was limited by component supply and to a lesser extent COVID restrictions in Malaysia. Relative to our guidance, gross margins were at the high end, resulting an earnings of $0.89 per share. Customer demand remains high and we ended Q3 with record backlog of over $770 million. The vast majority of this backlog is for proprietary products and roughly two-thirds is for orders that are shippable as soon as we can build them, highlighting the strong demand profile.

We believe this high level of shippable backlog represents meaningful upside to our current revenue levels for an extended period of time as the supply situation improves. In the near term, the availability and predictability of certain components, primarily critical ICs remains challenging and we expect supply constraints to continue to gate revenue. In addition, as we projected, our gross margins are being impacted by higher input costs in the form of premium buys, expedite fees, some price increases and under-utilization of our factories.

The majority of these costs are transitory and will naturally improve over time. But we are also taking proactive actions to mitigate the headwinds on both availability and cost, which we expect to begin yielding results in Q4 and increase over time. These include working with our customers on cost recovery and pricing, establishing strategic supply agreements with our suppliers and pursuing selective redesigns. During this time, we are retaining our factory capacity to be able to deliver higher revenue as parts become available and expect to maintain our broader infrastructure about flat, while reallocating resources to accelerate our most important programs.

While we will see some inflationary pressure in spending, we believe this approach is a good balance between managing short-term challenges and funding an extended set of opportunities for upside and long-term growth. As revenues recover, we expect to see good operating leverage and continue to believe we have the building blocks in place to achieve our medium and long-term goals.

Now let me go over our Q3 revenues by market. Semiconductor sales continued new record levels at $173 million, up from last year, but down slightly from last quarter. Demand remains strong and with Malaysia now allowed to operate at full capacity and modest improvement in parts supply, we expect Q4 Semiconductor sales to grow sequentially.

Revenue from our Industrial & Medical markets fell 3% from Q2 to $81 million. However, customer demand was broad-based and our backlog increased by almost 50%, sequentially. We saw revenue strength in thin-film coatings, medical and thermal sensing where our teams were able to overcome some of the parts shortages. Data Center Computing revenue was $62 million, and Telecom & Networking revenue was $30 million, both down from last quarter due to supply constraints, which have been particularly acute for ICs used in these markets. Our order book in these two markets continues to increase.

Non-GAAP gross margin for the quarter was 36.1%. The sequential decline was primarily due to increased input costs and factory under-utilization. Year-over-year, these costs are having an approximate 350 basis point impact to gross margins. While we are making progress on mitigating actions and cost recovery, we expect margins to continue around these levels for another quarter or so as the higher cost materials roll through inventory and impact our cost of goods sold. In addition, as Steve mentioned, we now plan to extend the operation of our Shenzhen factory through the end of Q2, which will impact gross margins in the near term, but provide additional shipment flexibility.

Non-GAAP operating expenses were $83.6 million, up about $1 million from last quarter. The sequential increase was mostly due to a full quarter of expenses from Tegam, which we acquired in June. Operating margin for the quarter was 11.9%. Other expense was $1.7 million, including $1.3 million of interest expense. We expect other expense to be in the $2 million range going forward, including the interest cost on our additional debt. Our non-GAAP tax expense was $5.6 million, or 14%, which was largely in line with our target of approximately 15% plus or minus. Earnings for the quarter were $0.89 per share compared to $1.25 last quarter.

Turning now to the balance sheet. We ended the third quarter with total cash of $550 million and net cash of $153 million. Operating cash flow was $18 million and capex was $8.5 million. During the quarter, we repurchased $52.6 million of common stock at $86.93 per share, taking advantage of market volatility to return cash to shareholders. We also paid $3.9 million in dividends.

Earlier in the quarter, we amended our existing credit agreement to increase our term loan by $85 million to $400 million, increase our undrawn revolving line of credit to $200 million and extend the remaining term to five years. With an attractive rate of LIBOR plus 75 basis points, this refinancing provides us with additional financial flexibility for inorganic growth, share repurchase and other corporate needs.

In Q3, our days of net working capital increased to 117 days. Inventory increased by $45 million in terms with 2.8 times, as we continue to acquire raw material to support future shipments. We believe this inventory is well matched to customer demand and although it may take a few quarters, we expect churns to rebound as critical parts shortages abate. Days payable fell to 76 days based on timing of payments. On the other hand, DSO improved 57 days on strong collections.

Now let me turn to guidance. Market demand and our order book continues to be extremely strong. However, we expect the supply environment to remain challenging in the near term. As a result, we expect Q4 revenues to be approximately $355 million plus or minus $20 million. Our Q4 guidance assumes Semi revenue will grow sequentially. We expect Q4 gross margin to be similar to Q3 based on higher material costs, offset by incremental benefits of mitigating actions.

Operating expenses should be flat to up slightly, largely due to the cost of inflation across a variety of areas. As a result, we expect Q4 non-GAAP earnings per share to be $0.92 plus or minus $0.25, based on a share count of approximately 38.2 million shares. We are taking a prudent approach for the next couple of quarters, assuming that the current supply environment will continue to limit revenue at around current levels in the near term. However, we are confident that our mitigating actions will yield incremental benefits in the coming quarters. With our large shippable backlog, we expect to see revenue upside of up to $50 million per quarter over our current run rate as supply normalizes.

Looking forward, we are more excited than ever about our expanding set of new opportunities and we'll continue to invest in R&D to accelerate our growth. As we take mitigating actions to manage component availability and cost, continue to optimize our portfolio and rationalize our factory footprint, we expect to achieve gross margins at or above our long-term goal of 41%. We remain focused on executing our strategy and are confident in our ability to reach our long-term revenue and earnings goals.

With that, let's take your questions. Operator?

Questions and Answers:

Operator

Thank you. At this time we'll now be conducting a question-and-answer session. [Operator Instructions]

Thank you. Our first question comes from the line of Tom Diffely with D.A. Davidson. Please proceed with your questions.

Tom Diffely -- D.A. Davidson -- Analyst

Yes. Good afternoon and thank you for the questions. Paul, follow-up on your last comment, I think you talked about revenue going up possibly $50 million a quarter, once supply constraints ease. As you talk to your suppliers, when do you think that starts? I mean, when do you see it into the IC supply issues?

Paul Oldham -- Executive Vice President and Chief Financial Officer

That's a good question, Tom. I think the challenge we have is in the near term we continue to see these critical parts being in short supply. But we have a highly engaged work with our supply chain, also with our customers to try to accelerate and increase the amount of parts. And while it's hard to say exactly when that will turn around, we do believe that over the course of next year, it will improve. I think it's very possible by time we get to the end of next year. We could be seeing revenues running at that level, current levels plus $50 million, which would be significant for us. We believe that could drive earnings power at that time as higher -- may be higher than $6 a share annualized.

Tom Diffely -- D.A. Davidson -- Analyst

Okay. That's very helpful. And then when you look at your four segments, could you kind of rank them in the order of which ones would be the most affected by the supply constraints?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. The ones that are being most affected are our higher volume markets, particularly the embedded power markets. These particular products use higher number of these critical ICs. There is also more standardization across those products. If you're a short one of these critical parts it might impact multiple families. Probably the second most impacted is our Industrial & Medical products and then Semi is actually performing quite well. As you see we continue to operate near-record levels, but certainly there are critical shortages there as well and we could be doing much better if we had the parts in place.

Tom Diffely -- D.A. Davidson -- Analyst

Great. And then finally, when you look at the -- you talked about qualifying new parts to get around some of the IC shortages, how long does that process take?

Steve Kelley -- President and Chief Executive Officer

Yeah, Tom, this is Steve Kelley. Yeah, we started that process in earnest three to four months ago for a number of our products. Typically, that price is going to take around 9 months to 12 months to do the redesign, to do the reliability testing, get the qualification from our customers. The good news for us is that our customers are highly motivated to qualify these new designs. So we're seeing record turnaround time. So it's possible we could get the costs on bit quicker than we expect.

Tom Diffely -- D.A. Davidson -- Analyst

Okay. Well, thank you both for your time today.

Paul Oldham -- Executive Vice President and Chief Financial Officer

Thanks, Tom.

Operator

The next question comes from the line of Krish Sankar with Cowen and Company. Please proceed with your question.

Krish Sankar -- Cowen and Company -- Analyst

Yeah. Hi thanks for taking my question. I had two of them too. First one, Paul, just want to follow-up, you said, where the revenue up to sort of $50 million a quarter, maybe happen later next year if that supply normalizes. Along the same path, how long do you think the gross margin or this component cost increase is going to get drag on gross margin. So is it beyond 4Q into 1Q or beyond the two? And then I have a follow-up. Thanks.

Paul Oldham -- Executive Vice President and Chief Financial Officer

As I said in our prepared remarks that we thought this would last a couple of more quarters. Certainly we have a lot of these premium buys, expedites that are rolling through now and some of that's an inventory. So there certainly is impact in Q4 and will likely impact Q1 as well. As we look beyond that, it will depend on how quickly we can move to more stable supply level where we're paying more normalized parts for these -- more normalized prices for these parts. So it's difficult to say in the near term, but certainly over the course of the year, we'd expect to see some improvement.

Probably, the simplest way to think about it is probably -- the situation probably persist for another couple of quarters and then gradually improves from there. We don't see a silver bullet, Krish, where suddenly magically things get much better, but we've done a lot to take mitigating actions, including working with our customers on cost recovery, on sharing some of the price changes that we're seeing, we're working with our suppliers to have better long-term agreements and sources of supply, which should hopefully get us out of some of the premium buys and things we're having to do through distribution and other channels. And as volume begins to improve, obviously, that helps our factory utilization as well.

So all those factors will contribute to margins getting back to where we'd like them. It's interesting if you look at the actual numbers, it's pretty clear that if you excluded the higher cost of materials we're paying in the near term and the impact on our factories we're certainly running at or around that 40% level. So some of these are transitory. The premium buys will pass more quickly. Some of them will be longer term and we think there'll be opportunity for price and other mitigating actions around redesign that Steve talked about earlier. But we feel confident as we look out -- I think in the last call, we thought the exit rate of 2022, we could be back around that 40% level. And we don't have a lot of visibility. Obviously, the timing could change but that's I think not an unreasonable way to think about it.

Krish Sankar -- Cowen and Company -- Analyst

Got it. That's really good color. Thanks for the color. And I just had two quick follow-ups. The $50 million incremental revenue, is it fair that you've given that -- in your prepared comments, you said there is a lot more supply constraint issues on the I&M, Telecom & Networking, Data Center side. Is the incremental $50 million more tied toward the legacy artisan business is the way to think about it and i.e., that's why you might see some price recovery and helping margins as the revenue comes back?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. I think it's definitely more of a mix, Krish. There is significant upside in our Semiconductor products, for a lot of reasons, demand is quite healthy there. And remember, not all of the semiconductor demand is in our backlog because of our [indecipherable] strategy with our largest customers. So there is significant upside in the Semi as well. It's fair to think of that, it would affect both, it would help all of our markets.

Krish Sankar -- Cowen and Company -- Analyst

Fair enough. Fair enough. And then just a final question for Steve. Steve, it seems like, maybe I'm wrong on this, but I'm just kind of curious, it looks like you're moving away from servicing the hyperscalers markets inside and moving shifting more to Industrial & Medical. A, is it true? If so, can you talk a bit about that strategy and how it will impact the long-term revenue margin profile for the company? Thank you.

Steve Kelley -- President and Chief Executive Officer

Yeah, Krish. I think it's fair to say the entire company is moving toward higher value added products. That includes what we're doing for hyperscalers and enterprise computing customers. If we take a look at I&M, the Industrial & Medical group, the most attractive part of that market is, it's almost entirely sole source, at least for us. And so we have put more engineering horsepower into the Industrial & Medical business and we expect to grow that at a faster rate moving forward.

Krish Sankar -- Cowen and Company -- Analyst

Thanks, Steve.

Operator

Our next question is from the line of Quinn Bolton with Needham and Company. Please proceed with your question.

Quinn Bolton -- Needham and Company -- Analyst

Hey, guys. Thanks for letting me ask the question. I wanted to follow up on Krish's question, maybe ask it a slightly different way. If you look at the business today, obviously, there's a lot of pent-up demand. But wondering how much of that affects the Industrial & Medical and Semi business versus the more embedded Telecom and Server businesses? I would think that there may be more perishable demand in those embedded markets. And so if the business comes back, does it come back faster in Industrial & Medical and Semi, which are higher margin businesses? Or do you think there's actually better growth off a pretty depressed level in the more embedded, but lower margin businesses as you come through next year?

Steve Kelley -- President and Chief Executive Officer

Yeah. Let me just echo what Paul said earlier. We see shortages across all of our businesses whether it's Semiconductors, Industrial & Medical and the high volume hyperscale and enterprise computing businesses. So it's hard to predict which comes back faster if they all come back at the same time. But I can say that we're working hard in all the businesses to close the gaps. We are paying significant premiums every week to source parts from various distribution and broker channels, and working closely with our customers in all the segments to meet their needs. So we really can't predict, which might will come back faster than another.

Quinn Bolton -- Needham and Company -- Analyst

Understood. And then the second question, you mentioned keeping Shenzhen facility open through the second quarter. Wondering if you might be able to quantify how much of a impact that might have on your fixed expense base, I imagine take that you close that down that there could be a nice gross margin lift in the second half of next year, especially as revenue at that point should be ramping as you start to meet some of this pent-up demand?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. That's right Quinn. We've said that the cost of keeping that site open from a fixed cost is between 15 and 100 basis points of gross margin.

Quinn Bolton -- Needham and Company -- Analyst

Got it. Okay. Thank you.

Operator

Our next question is from the line of Mehdi Hosseini with SIG. Please proceed with your question.

Mehdi Hosseini -- SIG -- Analyst

Yes, sir. Thanks for taking my question. Going back to your Q4 guide, what will be your revenue be if there was no supply chain disruption?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Well, I think it's easy to look at that in a hypothetical say, if there is no parts disruption, you could add that $50 million in today, at least. We certainly have shippable demand that's well in excess of that where customers will take the products as quickly as we can get them. And then it would be just a matter of manufacturing capacity, which we certainly have enough manufacturing capacity to meet that number. So it's really all about having the critical parts.

Steve Kelley -- President and Chief Executive Officer

Yeah. Let me just add to that. I mentioned in my prepared remarks that we are maintaining a full workforce in all of our factories. So we had the surge capacity to get well beyond $40 million a quarter in revenue. So we have the people in place and as the parts appear, we could build that equipment pretty rapidly.

Mehdi Hosseini -- SIG -- Analyst

Okay. And then you highlighted the growth in Semi business in the December quarter versus September. Should I assume that other business units will be flat to down and Semi will show growth, or would other business units would be flat?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. I would say generally speaking, Semi we expect to be up, probably Industrial & Medical flat up and the high volume would likely be the offset to that. The high volume being Telecom & Networking and Data Center Computing. But look, it's all about what parts we get in and where they go. That's a critical thing. So it's a little hard to predict exactly the mix.

Mehdi Hosseini -- SIG -- Analyst

Okay. And just for purposes of modeling and assuming that that $50 million of business were to come back throughout '22. Would you have to expand your opex? Should I assume that your opex will go up, maybe $1 million or $2 million per quarter? Or would you keep it kind of a flattish from here on?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. Our intent is to keep it flattish from here on. We have, as you know, Mehdi, sort of accelerated already investment in R&D because we have a lot of opportunities ahead of us working with our customers. We're very excited about those. And there'll be a little bit of inflationary pressures, but our goal is to basically keep our infrastructure flat. And then there'll be some inflation on top of that. But we don't need to add a lot of operating costs as revenues grow beyond just kind of your typical variable costs that are completely tied to revenue. So not much opex growth as revenues recover.

Mehdi Hosseini -- SIG -- Analyst

Got it. Thank you.

Operator

Thank you. [Operator Instructions] The next question is coming from the line of Pavel Molchanov with Raymond James. Please proceed with your question.

Pavel Molchanov -- Raymond James -- Analyst

Thanks for taking the question. You've done a little bit of M&A over the past year. But I'm serious if the supply chain complications that you and everybody else, clearly is experiencing might create some distressed situations that you could opportunistically take advantage of. Is that in a realistic scenario in terms of your -- some of the potential M&A targets?

Steve Kelley -- President and Chief Executive Officer

It's an interesting question, Pavel. What we're seeing actually is we have some targets we're looking at, but they don't want to do a transaction, because their financials are distressed because of their part shortages. So it's kind of a circle here. So I think as the parts shortages start to abate, I think, you'll see the potential for more deals in this space.

Pavel Molchanov -- Raymond James -- Analyst

Okay. So kind of the opposite of wide...

Steve Kelley -- President and Chief Executive Officer

Yeah. It's kind of the opposite.

Pavel Molchanov -- Raymond James -- Analyst

Okay. Fair enough. Your dividend is now at its one-year anniversary. Congrats on that. Should we anticipate a dividend increase at any point in '22?

Paul Oldham -- Executive Vice President and Chief Financial Officer

Yeah. Pavel, obviously, that's something that the Board will review on a regular basis. At this point, we're not really in a position to comment on that. But look at -- our focus right now is on growing our business. We think there is lot of opportunities to do that organically and inorganically. We're certainly investing a lot in working capital right now to support what we think is that upsize of growth. So we'll take that into stride, but no comments on that at this point.

Pavel Molchanov -- Raymond James -- Analyst

All right. Thank you guys.

Operator

[Operator Instructions] Thank you. At this time, we've reached the end of the question-and -answer session. I'll turn the call over to Steve Kelley, for his closing remarks.

Steve Kelley -- President and Chief Executive Officer

Yeah. Thanks for joining us today. We are dealing with near-term supply challenges, but we remain firmly focused on the timely introduction of new products and technologies, the drivers of AE's future, revenue and profit growth. With strong demand for our products, a record order book and a solid pipeline of high-value proprietary designs, we are well positioned to meet or exceed our medium and long-term financial targets. We look forward to talking with many of you in the coming weeks. Thank you.

Operator

[Operator Closing Remarks]

Duration: 34 minutes

Call participants:

Edwin Mok -- Vice President, Strategic Marketing and Investor Relations

Steve Kelley -- President and Chief Executive Officer

Paul Oldham -- Executive Vice President and Chief Financial Officer

Tom Diffely -- D.A. Davidson -- Analyst

Krish Sankar -- Cowen and Company -- Analyst

Quinn Bolton -- Needham and Company -- Analyst

Mehdi Hosseini -- SIG -- Analyst

Pavel Molchanov -- Raymond James -- Analyst

More AEIS analysis

All earnings call transcripts

AlphaStreet Logo

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.