Altra Industrial Motion Corp. (Nasdaq:AIMC), a global manufacturer
and marketer of electromechanical power transmission and motion
control products, today announced unaudited financial results for
the first quarter ended March 31, 2015.
Financial Highlights
- First-quarter 2015 net sales were $193.4 million, compared with
$210.1 million in the first quarter of 2014, a decrease of 7.9%.
The decrease in net sales was driven by a 5.6% unfavorable impact
from foreign exchange and an organic sales decline of 3.5%,
partially offset by 1.2% of growth from an acquisition.
- First-quarter net income was $9.4 million, or $0.36 per diluted
share, compared with $11.4 million, or $0.41 per diluted share, in
the first quarter of 2014. Non-GAAP net income in Q1
2015 decreased to $11.1 million, or $0.42 per
diluted share, from $13.1 million, or $0.48 per diluted
share, a year ago.*
- The Company purchased $4.6 million in Altra stock, or
approximately 171,000 shares, during the first quarter under its
$50 million repurchase program. Since the program's inception in
May 2014, the Company has purchased approximately $22.2 million, or
716,000 shares, under the program.
- Reconciliation of Non-GAAP Net Income*:
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Quarter Ended |
Quarter Ended |
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March 31, 2015 |
March 31, 2014 |
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Net income attributable to Altra Industrial
Motion Corp. |
9,398 |
11,365 |
|
|
|
Restructuring costs |
1,756 |
— |
Amortization of inventory fair value
adjustment |
— |
2,151 |
Acquisition related expenses |
738 |
426 |
|
|
|
Tax impact of above adjustments |
(761) |
(814) |
Non-GAAP net income* |
$ 11,131 |
$ 13,128 |
Non-GAAP diluted earnings per share* |
$ 0.42 |
$ 0.48 |
Management Comments
"Altra's first-quarter performance reflects the challenging
global economic environment and end market sluggishness we
projected at the beginning of the year," said Carl
Christenson, Altra's Chairman and CEO. "We continued to return
capital to shareholders, buying back $4.6 million of Altra shares
during the quarter through our stock repurchase program. To
better align our cost, we initiated restructuring and other cost
reduction activities across the Company which is reflected in our
guidance. These cost reduction activities will be implemented
as we progress through the year."
Business Outlook
"We continue to face market and currency headwinds," Christenson
said. "We experienced greater than expected negative impact from
foreign currency rate translation and the agriculture and mining
end markets were weaker than we anticipated. The oil & gas end
market remains challenging while the European and Russian economies
appear to have stabilized."
"On a positive note, the wind and turf & garden end markets
exceeded our expectations during the quarter. In addition, our
strategic pricing initiatives and Bauer profit improvement actions
are contributing to our margins as expected," stated
Christenson. "Finally, we remain confident in our strategic
growth initiatives and continue to invest in equipment and new
product development."
As a result of the stronger than expected U.S. Dollar and the
current economic environment, Altra is lowering and narrowing its
forecast and now expects sales in the range of $760 to $780 million
and non-GAAP diluted EPS guidance in the range of $1.60 to $1.75
for 2015. This guidance includes savings from the restructuring
actions taken to date. The Company expects its tax rate for the
full year to be approximately 30% to 32% before discrete items.
Altra also expects capital expenditures in the range of $24 to $26
million and depreciation and amortization in the range of $30 to
$32 million.*
The Company will conduct an investor conference call to discuss
its unaudited first quarter financial results on May 1, 2015 at
10:00 a.m. ET. The public is invited to listen to the conference
call by dialing (877) 407-8293 domestically or (201) 689-8349 for
international access and asking to participate in the Altra
conference call. A live webcast of the call will be available in
the "Investor Relations" section of www.altramotion.com.
Individuals may download charts that will be used during the call
at www.altramotion.com under "Events and Presentations" in the
Investor Relations section. The charts will be available after
earnings are released. A replay of the recorded conference call
will be available at the conclusion of the call on May 1 through
midnight on May 14, 2015. To listen to the replay, dial (877)
660-6853 domestically or (201) 612-7415 for international access
(conference ID # 13607063). A webcast replay also will be
available.
Altra Industrial
Motion Corp. |
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Consolidated Statements of Income
Data |
Quarter Ended |
|
In Thousands of Dollars, except per share
amount |
March 31, 2015 |
|
March 31, 2014 |
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
|
|
|
Net sales |
$ 193,361 |
|
$ 210,138 |
|
Cost of sales |
134,888 |
|
148,342 |
|
Gross profit |
$ 58,473 |
|
$ 61,796 |
|
Gross profit as a percent of net sales |
30.2% |
|
29.4% |
|
Selling, general & administrative
expenses |
36,302 |
|
38,262 |
|
Research and development expenses |
4,762 |
|
3,889 |
|
Restructuring Charges |
1,756 |
|
— |
|
Income from operations |
$ 15,653 |
|
$ 19,645 |
|
Income from operations as a percent of
net sales |
8.1% |
|
9.3% |
|
Interest expense, net |
2,956 |
|
3,019 |
|
Other non-operating (income) expense,
net |
(829) |
|
534 |
|
Income before income taxes |
$ 13,526 |
|
$ 16,092 |
|
Provision for income taxes |
4,136 |
|
4,729 |
|
Income tax rate |
30.6% |
|
29.4% |
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Net income |
9,390 |
|
11,363 |
|
Net loss attributable to non-controlling
interest |
8 |
|
2 |
|
Net income attributable to Altra
Industrial Motion Corp. |
9,398 |
|
11,365 |
|
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Weighted Average common shares
outstanding |
|
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Basic |
26,280 |
|
26,733 |
|
Diluted |
26,357 |
|
27,444 |
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Net income per share |
|
|
|
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Basic |
$ 0.36 |
|
$ 0.43 |
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Diluted |
$ 0.36 |
|
$ 0.41 |
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|
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Reconciliation of Non-GAAP Income
From Operations: |
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Income from operations |
$ 15,653 |
|
$ 19,645 |
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|
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Restructuring costs |
1,756 |
|
— |
|
Amortization of inventory fair value
adjustment |
— |
|
2,151 |
|
Acquisition related expenses |
738 |
|
426 |
|
Non-GAAP income from operations * |
$ 18,147 |
|
$ 22,222 |
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Reconciliation of Non-GAAP Net
Income: |
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|
|
|
|
|
|
|
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Net income attributable to Altra Industrial
Motion Corp. |
9,398 |
|
11,365 |
|
|
|
|
|
|
Restructuring costs |
1,756 |
|
— |
|
Amortization of inventory fair value
adjustment |
— |
|
2,151 |
|
Acquisition related expenses |
738 |
|
426 |
|
Tax impact of above adjustments |
(761) |
|
(814) |
|
Non-GAAP net income * |
$ 11,131 |
|
$ 13,128 |
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Non-GAAP diluted earnings per share * |
$ 0.42 |
(1) |
$ 0.48 |
(2) |
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(1) - tax impact is calculated by
multiplying the estimated effective tax rate for the period of
30.5% by the above items |
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(2) - tax impact is calculated by
multiplying the estimated effective tax rate for the period of
31.6% by the above items |
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Consolidated Balance
Sheets |
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In Thousands of Dollars |
March 31, 2015 |
December 31, 2014 |
|
(unaudited) |
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Assets: |
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Current Assets |
|
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Cash and cash equivalents |
$ 47,426 |
$ 47,503 |
Trade receivables, net |
113,047 |
106,458 |
Inventories |
127,598 |
132,736 |
Deferred income taxes |
9,118 |
9,240 |
Income tax receivable |
3,276 |
6,247 |
Prepaid expenses and other current
assets |
8,445 |
8,617 |
Total current assets |
308,910 |
310,801 |
Property, plant and equipment, net |
151,694 |
156,366 |
Intangible assets, net |
102,579 |
110,730 |
Goodwill |
97,751 |
102,087 |
Deferred income taxes |
934 |
987 |
Other non-current assets, net |
3,207 |
3,592 |
Total assets |
$ 665,075 |
$ 684,563 |
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|
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Liabilities, non-controlling interest and
stockholders' equity |
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Current liabilities |
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Accounts payable |
$ 47,491 |
$ 44,298 |
Accrued payroll |
18,085 |
23,254 |
Accruals and other current
liabilities |
30,598 |
33,591 |
Deferred income taxes |
123 |
120 |
Income tax payable |
3,028 |
3,189 |
Current portion of long-term debt |
15,743 |
15,176 |
Total current liabilities |
115,068 |
119,628 |
Long-term debt, less current portion and
net of unaccreted discount |
241,901 |
240,576 |
Deferred income taxes |
51,916 |
53,226 |
Pension liabilities |
9,306 |
9,993 |
Long-term taxes payable |
636 |
629 |
Other long-term liabilities |
808 |
869 |
Redeemable non-controlling interest |
719 |
883 |
Total stockholders' equity |
244,721 |
258,759 |
Total liabilities, redeemable non-controlling
interest and stockholders' equity |
$ 665,075 |
$ 684,563 |
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Reconciliation to operating working
capital: |
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Trade receivables, net |
113,047 |
106,458 |
Inventories |
127,598 |
132,736 |
Accounts payable |
(47,491) |
(44,298) |
Operating working capital * |
$ 193,154 |
$ 194,896 |
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Year to Date
Ended |
|
March 31, 2015 |
March 31, 2014 |
|
(Unaudited) |
(Unaudited) |
Cash flows from operating
activities |
|
|
Net income |
$ 9,390 |
$ 11,363 |
Adjustments to reconcile net income to net
cash flows: |
|
|
Depreciation |
5,343 |
5,845 |
Amortization of intangible assets |
2,162 |
2,219 |
Amortization of deferred financing
costs |
239 |
232 |
(Gain)/Loss on foreign currency, net |
(67) |
305 |
Amortization of inventory fair value
adjustment |
— |
2,151 |
Accretion of debt discount, net |
892 |
823 |
(Gain) / Loss on disposal of fixed
assets |
(26) |
212 |
Stock based compensation |
1,110 |
874 |
Changes in assets and liabilities: |
|
|
Trade receivables |
(10,091) |
(11,957) |
Inventories |
991 |
1,439 |
Accounts payable and accrued
liabilities |
2,823 |
4,944 |
Other current assets and liabilities |
(82) |
829 |
Other operating assets and
liabilities |
90 |
(206) |
Net cash flows from operating
activities |
12,774 |
19,073 |
Cash flows from investing
activities |
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Purchase of property, plant and
equipment |
(7,731) |
(5,617) |
Net cash flows from investing
activities |
(7,731) |
(5,617) |
Cash flows from financing
activities |
|
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Payments on Term Loan Facility |
(2,359) |
(6,261) |
Payments on Revolving Credit Facility |
— |
(6,165) |
Dividend payments |
(3,178) |
(2,696) |
Proceeds from Equipment and Working Capital
Notes |
945 |
582 |
Payments of Equipment and Working Capital
Notes |
(412) |
— |
Borrowing under Revolving Credit
Facility |
5,000 |
— |
Proceeds from Bauer Mortgage |
3,647 |
— |
Shares surrendered for tax withholdings |
(128) |
(132) |
Payments on mortgages and other debt |
(53) |
(199) |
Purchases of common stock under share
repurchase program |
(4,558) |
— |
Net cash flows from financing
activities |
(1,096) |
(14,871) |
Effect of exchange rate changes on cash and
cash equivalents |
(4,024) |
(340) |
Net change in cash and cash
equivalents |
(77) |
(1,755) |
Cash and cash equivalents at beginning of
year |
47,503 |
63,604 |
Cash and cash equivalents at end of
period |
$ 47,426 |
$ 61,849 |
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Reconciliation to free cash flow: |
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Net cash flows from operating activities |
12,774 |
19,073 |
Purchase of property, plant and
equipment |
(7,731) |
(5,617) |
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Free cash flow * |
$ 5,043 |
$ 13,456 |
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Altra Industrial Motion
Corp. |
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Selected Segment Data |
Quarter Ended |
In Thousands of Dollars, except per share
amount |
March 31, 2015 |
March 31, 2014 |
|
(Unaudited) |
(Unaudited) |
|
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|
Net Sales |
|
|
Clutches & Brakes |
$ 101,595 |
$ 113,019 |
Couplings |
31,934 |
30,988 |
Gearing and Power Transmission
Components |
61,465 |
67,297 |
Eliminations |
(1,633) |
(1,166) |
Total |
$ 193,361 |
$ 210,138 |
|
|
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Income from operations |
|
|
Clutches & Brakes |
$ 11,743 |
$ 12,874 |
Couplings |
2,888 |
3,483 |
Gearing and Power Transmission
Components |
5,402 |
5,535 |
Restructuring |
(1,756) |
— |
Corporate |
(2,624) |
(2,247) |
Total |
$ 15,653 |
$ 19,645 |
About Altra Industrial Motion Corp.
Altra Industrial Motion Corp., through its subsidiaries, is a
leading global designer, producer and marketer of a wide range of
electromechanical power transmission products. The Company brings
together strong brands covering over 40 product lines with
production facilities in 12 countries. Altra's leading brands
include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex,
Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian
Couplings, Huco, Industrial Clutch, Inertia
Dynamics, Kilian Manufacturing, Lamiflex Couplings, Marland
Clutch, Matrix, Nuttall Gear, Stieber Clutch, Svendborg
Brakes, TB Wood's, Twiflex, Warner
Electric, Warner Linear, and Wichita Clutch.
The Altra Industrial Motion
Corp. logo is available
at http://www.globenewswire.com/newsroom/prs/?pkgid=4038.
* Discussion of Non-GAAP Financial Measures
As used in this release and the accompanying slides posted on
the Company's website, non-GAAP diluted earnings per share,
non-GAAP income from operations and non-GAAP net income are each
calculated using either net income or income from operations that
excludes acquisition related costs, restructuring costs, and other
income or charges that management does not consider to be directly
related to the Company's core operating performance. Non-GAAP
diluted earnings per share is calculated by dividing non-GAAP net
income by GAAP weighted average shares outstanding (diluted).
Non-GAAP free cash flow is calculated by deducting purchases of
property, plant and equipment from net cash flows from operating
activities. Non-GAAP operating working capital is calculated
by deducting accounts payable from net trade receivables plus
inventories.
Altra believes that the presentation of non-GAAP net income,
non-GAAP income from operations, non-GAAP diluted earnings per
share, non-GAAP free cash flow and non-GAAP operating working
capital provides important supplemental information to management
and investors regarding financial and business trends relating to
the Company's financial condition and results of operations.
Forward-Looking Statements
All statements, other than statements of historical fact
included in this release are forward-looking statements, as that
term is defined in the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to, any
statement that may predict, forecast, indicate or imply future
results, performance, achievements or events. Forward-looking
statements can generally be identified by phrases such as
"believes," "expects," "potential," "continues," "may," "should,"
"seeks," "predicts," "anticipates," "intends," "projects,"
"estimates," "plans," "could," "designed", "should be," and other
similar expressions that denote expectations of future or
conditional events rather than statements of fact. Forward-looking
statements also may relate to strategies, plans and objectives for,
and potential results of, future operations, financial results,
financial condition, business prospects, growth strategy and
liquidity, and are based upon financial data, market assumptions
and management's current business plans and beliefs or current
estimates of future results or trends available only as of the time
the statements are made, which may become out of date or
incomplete. Forward-looking statements are inherently uncertain,
and investors must recognize that events could differ significantly
from our expectations. These statements include, but may not be
limited to, those relating to the Company's progress on corporate
initiatives and strategic pricing, the Company's views and
assessment of economic conditions, foreign currency trends, end
market conditions and industrial demand, the Company's progress on
executing its acquisition and organic growth strategies and new
product development, the Company's progress on implementing profit
improvement initiatives, the Company's progress and future plans on
implementing and pursuing cost reduction activities, the impact
of potential cost management and restructuring activities on
earnings, the Company's unaudited 2015 financial information, and
the Company's guidance for full year 2015.
In addition to the risks and uncertainties noted in this
release, there are certain factors that could cause actual results
to differ materially from those anticipated by some of the
statements made. These include: (1) competitive pressures, (2)
changes in economic conditions in the United States and
abroad and the cyclical nature of our markets, (3) loss of
distributors, (4) the ability to develop new products and respond
to customer needs, (5) risks associated with international
operations, including currency risks, (6) accuracy of estimated
forecasts of OEM customers and the impact of the current global
economic environment on our customers, (7) risks associated with a
disruption to our supply chain, (8) fluctuations in the costs of
raw materials used in our products, (9) product liability claims,
(10) work stoppages and other labor issues, (11) changes in
employment, environmental, tax and other laws and changes in the
enforcement of laws, (12) loss of key management and other
personnel, (13) risks associated with compliance with environmental
laws, (14) the ability to successfully execute, manage and
integrate key acquisitions and mergers, (15) failure to obtain or
protect intellectual property rights, (16) risks associated with
impairment of goodwill or intangibles assets, (17) failure of
operating equipment or information technology infrastructure, (18)
risks associated with our debt leverage and operating covenants
under our debt instruments, (19) risks associated with restrictions
contained in our Convertible Notes and Credit Facility, (20) risks
associated with compliance with tax laws, (21) risks associated
with the global recession and volatility and disruption in the
global financial markets, (22) risks associated with
implementation of our new ERP system, (23) risks associated with
the Lamiflex, Svendborg and Guardian acquisitions and integration
and other acquisitions, (24) risks associated with the Company's
investment in a new manufacturing facility in China, (25)
risks associated with certain minimum purchase agreements we have
with suppliers, (26) risks associated with our exposure to variable
interest rates and foreign currency exchange rates, (27) risks
associated with interest rate swap contracts, (28) risks associated
with the potential dilution of our common stock as a result of our
convertible notes, (29) risks associated with our exposure to
renewable energy markets, (30) risks related to regulations
regarding conflict minerals, and (31) other risks, uncertainties
and other factors described in the Company's quarterly reports on
Form 10-Q and annual reports on Form 10-K and in the Company's
other filings with the U.S. Securities and Exchange
Commission (SEC) or in materials incorporated therein by
reference. Except as required by applicable law, Altra Industrial
Motion Corp. does not intend to, update or alter its forward
looking statements, whether as a result of new information, future
events or otherwise. AIMC-E
CONTACT: Altra Industrial Motion Corp.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com
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