UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
October 24, 2014
Date of Report (Date of earliest event reported)
|
| | |
| | |
ALTRA INDUSTRIAL MOTION CORP. (Exact name of registrant as specified in its charter) |
| | |
|
| | | | |
Delaware | | 001-33209 | | 61-1478870 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
| |
300 Granite Street, Suite 201 Braintree, Massachusetts | | 02184 |
(Address of principal executive offices) | | (Zip Code) |
|
|
(781) 917-0600 (Registrant’s telephone number, including area code)
|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
|
| | |
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|
| | |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
|
| | |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
|
| | |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
|
| |
Item 2.02 | Results of Operations and Financial Condition |
On October 24, 2014, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the third quarter ended September 30, 2014. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On October 24, 2014, the Company will hold a conference call with investors to discuss unaudited third quarter results. The chart presentation to be used during the call is attached hereto as Exhibit 99.2 to this report and is incorporated by reference herein.
|
| |
Item 9.01 | Financial Statements and Exhibits |
(d) Exhibits
|
| | |
99.1 | | Press release of Altra Industrial Motion Corp., dated October 24, 2014. |
| |
99.2 | | Charts to be used during the investor conference call on October 24, 2014. |
|
| | |
EXHIBIT INDEX | | |
| |
99.1 | | Press release of Altra Industrial Motion Corp., dated October 24, 2014. |
| |
99.2 | | Charts to be used during the investor conference call on October 24, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
| | |
ALTRA INDUSTRIAL MOTION CORP. |
|
/s/ Carl R. Christenson |
Name: | | Carl R. Christenson |
Title: | | Chairman and Chief Executive Officer |
Date: October 24, 2014
Altra Reports Third-Quarter 2014 Results
Achieved 16.0% Year over Year Revenue Growth
Returned Over $21 Million to Shareholders Year to Date
BRAINTREE, Mass., October 24, 2014 -- 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 third quarter ended September 30, 2014.
Financial Highlights
| |
• | Third-quarter 2014 net sales were $202.5 million, compared with $175.4 million in the third quarter of 2013, an increase of 16.0%. Excluding the impact of the Svendborg and Guardian acquisitions, third-quarter sales were $178.6 million, an increase of 1.8% from the same quarter of 2013. |
| |
• | Third-quarter net income was $6.9 million, or $0.25 per diluted share, compared with $10.5 million, or $0.39 per diluted share, in the third quarter of 2013. Non-GAAP net income in Q3 2014 increased to $12.2 million, or $0.45 per diluted share, from $10.8 million, or $0.40 per diluted share, a year ago.* |
| |
• | During the quarter ended September 30, 2014, the Company recognized a discrete tax expense of approximately $3.8 million, of which approximately $2.4 million relates to expected cash tax payments, relating to a reorganization of its foreign subsidiaries reporting ownership. This reorganization is expected to result in the reduction of Altra’s tax rate by 100 to 150 basis points beginning in the fourth quarter of 2014. |
| |
• | The Company purchased $9.9 million in Altra stock, or approximately 301,000 shares, during the third quarter through its $50 million repurchase program, which expires at the end of 2016. |
| |
• | The Company initiated a European restructuring plan and incurred approximately $1.6 million of expense, primarily from head count reductions in the quarter ended September 30, 2014. |
| |
• | Reconciliation of Non-GAAP Net Income*: |
|
| | | | | | | | | | | | |
| Quarter Ended | Year to date ended | Quarter Ended | Year to date ended |
| September 30, 2014 | September 28, 2013 |
Net income attributable to Altra Industrial Motion Corp. | 6,946 |
| 31,108 |
| 10,501 |
| 33,070 |
|
| | | | |
Restructuring costs | 1,643 |
| 1,643 |
| 97 |
| 655 |
|
Amortization of inventory fair value adjustment | 113 |
| 2,264 |
| — |
| — |
|
European workers compensation claim | 355 |
| 355 |
| — |
| — |
|
Acquisition related expenses | 18 |
| 899 |
| 282 |
| 365 |
|
Tax impact of above adjustments | (592 | ) | (1,548 | ) | (125 | ) | (319 | ) |
Tax impact of foreign reorganization | 3,758 |
| 3,758 |
| — |
| — |
|
Non-GAAP net income* | $ | 12,241 |
| $ | 38,479 |
| $ | 10,755 |
| $ | 33,771 |
|
Non-GAAP diluted earnings per share* | $ | 0.45 |
| $ | 1.41 |
| $ | 0.40 |
| $ | 1.26 |
|
Management Comments
"Our solid third-quarter performance met our expectations, even as we faced headwinds from discrete healthcare related costs and the weaker than expected European economy," said Carl Christenson, Altra's Chairman and CEO. “Most of our end markets continued to demonstrate good demand in the quarter. We again generated strong cash flow, which has enabled Altra to return over $21 million to shareholders through quarterly dividends and our stock repurchase program through the first nine months of the year.”
Business Outlook
"Our various corporate initiatives, including strategic pricing, the ramp-up of the China facility and our improvement of underperforming businesses, remain on track,” said Christenson. “We have completed the integration of SAP at all of the target sites, and we are excited about the investments we are making in new business activities. We also have made a significant investment in the reorganization of our foreign subsidiaries reporting structure in order to reduce our ongoing tax rate by 100 to 150 basis points, beginning in the fourth quarter. However, given the deteriorating economic environment in Europe and prolonged higher medical claims costs, we are narrowing our EPS guidance for 2014 to the lower end of our range.”
Altra is narrowing its revenue guidance for 2014 to the range of $815 to $825 million. The Company also is narrowing its non-GAAP diluted EPS guidance for 2014 to $1.75 to $1.80. As a result of the foreign subsidiary reorganization, the Company now 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 $23 to $25 million and depreciation and amortization in the range of $32 to $33 million.*
The Company will host an investor conference call to discuss its third-quarter financial results today, October 24, 2014, 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 & 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 October 24, through midnight on November 7, 2014. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (conference ID # 13593516). A webcast replay also will be available at www.altramotion.com.
|
| | | | | | | | | | | | | | | | |
Altra Industrial Motion Corp. | |
Consolidated Statements of Income Data | Quarter Ended | | Year to Date Ended | |
In Thousands of Dollars, except per share amount | September 30, 2014 | | September 28, 2013 | | September 30, 2014 | | September 28
2013 | |
| (Unaudited) | | (Unaudited) | | (Unaudited) | | (Unaudited) | |
| | | | | | | | |
Net sales | $ | 202,520 |
| | $ | 175,443 |
| | $ | 627,856 |
| | $ | 541,688 |
| |
Cost of sales | 140,187 |
| | 121,785 |
| | 437,257 |
| | 378,112 |
| |
Gross profit | $ | 62,333 |
| | $ | 53,658 |
| | $ | 190,599 |
| | $ | 163,576 |
| |
Gross profit as a percent of net sales | 30.8 | % | | 30.6 | % | | 30.4 | % | | 30.2 | % | |
Selling, general & administrative expenses | 39,067 |
| | 31,672 |
| | 117,828 |
| | 96,742 |
| |
Research and development expenses | 3,818 |
| | 3,002 |
| | 11,719 |
| | 9,150 |
| |
Restructuring Charges | 1,643 |
| | 97 |
| | 1,643 |
| | 655 |
| |
Income from operations | $ | 17,805 |
| | $ | 18,887 |
| | $ | 59,409 |
| | $ | 57,029 |
| |
Income from operations as a percent of net sales | 8.8 | % | | 10.8 | % | | 9.5 | % | | 10.5 | % | |
Interest expense, net | 3,000 |
| | 2,567 |
| | 8,991 |
| | 7,830 |
| |
Other non-operating expense (income), net | (313 | ) | | 686 |
| | 446 |
| | 783 |
| |
Income before income taxes | 15,118 |
| | 15,634 |
| | 49,972 |
| | 48,416 |
| |
Provision for income taxes | $ | 8,170 |
| | $ | 5,176 |
| | $ | 18,843 |
| | $ | 15,423 |
| |
Income tax rate | 54.0 | % | | 33.1 | % | | 37.7 | % | | 31.9 | % | |
Net income | 6,948 |
| | 10,458 |
| | 31,129 |
| | 32,993 |
| |
Net loss (income) attributable to non-controlling interest | (2 | ) | | 43 |
| | (21 | ) | | 77 |
| |
Net income attributable to Altra Industrial Motion Corp. | 6,946 |
| | 10,501 |
| | 31,108 |
| | 33,070 |
| |
| | | | | | | | |
| | | | | | | | |
Weighted Average common shares outstanding | | | | | | | | |
Basic | 26,648 |
| | 26,780 |
| | 26,785 |
| | 26,750 |
| |
Diluted | 27,334 |
| | 26,836 |
| | 27,557 |
| | 26,852 |
| |
| | | | | | | | |
Net income per share | | | | | | | | |
Basic | $ | 0.26 |
| | $ | 0.39 |
| | $ | 1.16 |
| | $ | 1.24 |
| |
Diluted | $ | 0.25 |
| | $ | 0.39 |
| | $ | 1.13 |
| | $ | 1.23 |
| |
| | | | | | | | |
Reconciliation of Non-GAAP Income From Operations: | | | | | | | | |
| | | | | | | | |
Income from operations | $ | 17,805 |
| | $ | 18,887 |
| | $ | 59,409 |
| | $ | 57,029 |
| |
| | | | | | | | |
Restructuring costs | 1,643 |
| | 97 |
| | 1,643 |
| | 655 |
| |
Amortization of inventory fair value adjustment | 113 |
| | — |
| | 2,264 |
| | — |
| |
European workers compensation claim | 355 |
| | | | 355 |
| | | |
Acquisition related expenses | 18 |
| | 282 |
| | 899 |
| | 365 |
| |
Non-GAAP income from operations * | $ | 19,934 |
| | $ | 19,266 |
| | $ | 64,570 |
| | $ | 58,049 |
| |
| | | | | | | | |
Reconciliation of Non-GAAP Net Income: | | | | | | | | |
| | | | | | | | |
Net income attributable to Altra Industrial Motion Corp. | 6,946 |
| | 10,501 |
| | 31,108 |
| | 33,070 |
| |
| | | | | | | | |
Restructuring costs | 1,643 |
| | 97 |
| | 1,643 |
| | 655 |
| |
Amortization of inventory fair value adjustment | 113 |
| | — |
| | 2,264 |
| | — |
| |
European workers compensation claim | 355 |
| | — |
| | 355 |
| | — |
| |
Acquisition related expenses | 18 |
| | 282 |
| | 899 |
| | 365 |
| |
Tax impact of above adjustments | (592 | ) | | (125 | ) | | (1,548 | ) | | (319 | ) | |
Tax impact of foreign reorganization | 3,758 |
| | — |
| | 3,758 |
| | — |
| |
Non-GAAP net income * | $ | 12,241 |
| | $ | 10,755 |
| | $ | 38,479 |
| | $ | 33,771 |
| |
| | | | | | | | |
| | | | | | | | |
Non-GAAP diluted earnings per share * | $ | 0.45 |
| (1) | $ | 0.40 |
| (2) | $ | 1.41 |
| (3) | $ | 1.26 |
| (4) |
| | | | | | | | |
(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 27.8% by the above items | |
(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 33.1% by the above items | |
(3) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 30.0% by the above items | |
(4) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.3% by the above items | |
|
| | | | | | | |
Consolidated Balance Sheets | | | |
In Thousands of Dollars | September 30, 2014 | | December 31, 2013 |
| (unaudited) | | |
Assets: | | | |
Current Assets | | | |
Cash and cash equivalents | $ | 42,994 |
| | $ | 63,604 |
|
Trade receivables, net | 117,872 |
| | 109,084 |
|
Inventories | 135,383 |
| | 143,665 |
|
Deferred income taxes | 9,821 |
| | 9,754 |
|
Asset held for sale | 573 |
| | — |
|
Income tax receivable | 1,918 |
| | 5,032 |
|
Prepaid expenses and other current assets | 8,195 |
| | 18,066 |
|
Total current assets | 316,756 |
| | 349,205 |
|
Property, plant and equipment, net | 152,776 |
| | 157,535 |
|
Intangible assets, net | 115,530 |
| | 118,768 |
|
Goodwill | 104,653 |
| | 104,339 |
|
Deferred income taxes | 894 |
| | 934 |
|
Other non-current assets, net | 4,188 |
| | 4,895 |
|
Total assets | $ | 694,797 |
|
| $ | 735,676 |
|
| | | |
Liabilities and stockholders' equity | | | |
Current liabilities | | | |
Accounts payable | $ | 43,914 |
| | $ | 51,180 |
|
Accrued payroll | 24,194 |
| | 23,983 |
|
Accruals and other current liabilities | 38,649 |
| | 34,979 |
|
Deferred income taxes | 44 |
| | 44 |
|
Income tax payable | 4,088 |
| | 12,963 |
|
Current portion of long-term debt | 14,532 |
| | 16,924 |
|
Total current liabilities | 125,421 |
| | 140,073 |
|
Long-term debt, less current portion and net of unaccreted discount | 237,062 |
| | 261,348 |
|
Deferred income taxes | 53,822 |
| | 53,813 |
|
Pension liabilities | 7,565 |
| | 8,025 |
|
Long-term taxes payable | 762 |
| | 1,038 |
|
Other long-term liabilities | 844 |
| | 1,055 |
|
Redeemable non-controlling interest | 979 |
| | 991 |
|
Total stockholders' equity | 268,342 |
| | 269,333 |
|
Total liabilities, non-controlling interest and stockholders' equity | $ | 694,797 |
| | $ | 735,676 |
|
| | | |
| | | |
Reconciliation to operating working capital: | | | |
Trade receivables, net | 117,872 |
| | 109,084 |
|
Inventories | 135,383 |
| | 143,665 |
|
Accounts payable | $ | (43,914 | ) | | $ | (51,180 | ) |
Operating working capital * | 209,341 |
| | 201,569 |
|
| | | |
|
| | | | | | | |
| Year to Date Ended |
| September 30, 2014 | | September 28, 2013 |
| (Unaudited) | | (Unaudited) |
Cash flows from operating activities | | | |
Net income | $ | 31,129 |
| | $ | 32,993 |
|
Adjustments to reconcile net income to net cash flows: | | | |
Depreciation | 17,238 |
| | 16,047 |
|
Amortization of intangible assets | 6,884 |
| | 4,882 |
|
Amortization of deferred financing costs | 699 |
| | 646 |
|
Loss on foreign currency, net | 461 |
| | 593 |
|
Amortization of inventory fair value adjustment | 2,264 |
| | — |
|
Accretion of debt discount, net | 2,527 |
| | 2,331 |
|
Loss on disposal of fixed assets | 195 |
| | — |
|
Provision for deferred taxes | 1,350 |
| | — |
|
Stock based compensation | 2,633 |
| | 2,397 |
|
Changes in assets and liabilities: | | | |
Trade receivables | (11,452 | ) | | (8,756 | ) |
Inventories | 5,276 |
| | 3,451 |
|
Accounts payable and accrued liabilities | (6,682 | ) | | 9,197 |
|
Other current assets and liabilities | 9,704 |
| | 254 |
|
Other operating assets and liabilities | (188 | ) | | (1,866 | ) |
Net cash flows from operating activities | 62,038 |
| | 62,169 |
|
Cash flows from investing activities | | | |
Purchase of property, plant and equipment | (16,464 | ) | | (14,361 | ) |
Proceeds from sale of land | 274 |
| | — |
|
Acquisition of Guardian, net of $2.0 million cash acquired | (15,092 | ) | | — |
|
Net cash flows from investing activities | (31,282 | ) | | (14,361 | ) |
Cash flows from financing activities | | | |
Payments on Term Loan Facility | (21,478 | ) | | (3,750 | ) |
Payments on Revolving Credit Facility | (9,190 | ) | | (54,304 | ) |
Dividend payments | (8,644 | ) | | (4,852 | ) |
Proceeds from Equipment and Working Capital Notes | 2,245 |
| | 3,550 |
|
Payments of Equipment and Working Capital Notes | (1,028 | ) | | (1,100 | ) |
Borrowing under Revolving Credit Facility | 5,000 |
| | — |
|
Shares surrendered for tax withholdings | (1,447 | ) | | (1,166 | ) |
Payments on mortgages and other debt | (435 | ) | | (540 | ) |
Common stock repurchase under share repurchase program | (12,816 | ) | | — |
|
Net cash flows from financing activities | (47,793 | ) | | (62,162 | ) |
Effect of exchange rate changes on cash and cash equivalents | (3,573 | ) | | (528 | ) |
Net change in cash and cash equivalents | (20,610 | ) | | (14,882 | ) |
Cash and cash equivalents at beginning of year | 63,604 |
| | 85,154 |
|
Cash and cash equivalents at end of period | $ | 42,994 |
| | $ | 70,272 |
|
| | | |
Reconciliation to free cash flow: | | | |
Net cash flows from operating activities | 62,038 |
| | 62,169 |
|
Purchase of property, plant and equipment | (16,464 | ) | | (14,361 | ) |
| | | |
Free cash flow * | $ | 45,574 |
| | $ | 47,808 |
|
| | | |
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 11 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, strategic pricing, the ramp-up of its China facility, and improvement of underperforming businesses, the Company's views and assessment of end market conditions and industrial demand, the impact of certain future costs and the impact of the Company’s restructuring activities on earnings, the Company’s expectations about the tax impact of its restructuring activities, the Company's unaudited 2014 financial information, and the Company's guidance for full year 2014.
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) changes in pension and retirement liabilities, (14) risks associated with compliance with environmental laws, (15) the ability to successfully execute, manage and integrate key acquisitions and mergers, (16) failure to obtain or protect intellectual property rights, (17) risks associated with impairment of goodwill or intangibles assets, (18) failure of operating equipment or information technology infrastructure, (19) risks associated with our debt leverage and operating covenants under our debt instruments, (20) risks associated with restrictions contained in our Convertible Notes and Credit Facility, (21) risks associated with compliance with tax laws, (22) risks associated with the global recession and volatility and disruption in the global financial markets, (23) risks associated with implementation of our new ERP system, (24) risks associated with the Bauer, Lamiflex, Svendborg and Guardian acquisitions and integration and other acquisitions, (25) risks associated with the Company's investment in a new manufacturing facility in China, (26) risks associated with certain minimum purchase agreements we have with suppliers, (27) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (28) risks associated with interest rate swap contracts, (29) risks associated with the potential dilution of our common stock as a result of our convertible notes, (30) risks associated with our exposure to renewable energy markets, (31) risks related to regulations regarding conflict minerals, and (32) 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
Third-Quarter 2014 Results October 24, 2014 10:00 AM ET Dial In Number 877-407-8293 Domestic 201-689-8349 International Webcast at www.altramotion.com Replay Number Through November 7, 2014 877-660-6853 Domestic 201-612-7415 International Conference ID: # 13593516 Webcast Replay at www.altramotion.com
Safe Harbor Statement Cautionary Statement Regarding 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, strategic pricing, the ramp-up of its China facility, and improvement of underperforming businesses, the Company's views and assessment of end market conditions and industrial demand, the impact of certain future costs and the impact of the Company’s restructuring activities on earnings, the Company’s expectations about the tax impact of its restructuring activities, the Company's unaudited 2014 financial information, and the Company's guidance for full year 2014. • 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) changes in pension and retirement liabilities, (14) risks associated with compliance with environmental laws, (15) the ability to successfully execute, manage and integrate key acquisitions and mergers, (16) failure to obtain or protect intellectual property rights, (17) risks associated with impairment of goodwill or intangibles assets, (18) failure of operating equipment or information technology infrastructure, (19) risks associated with our debt leverage and operating covenants under our debt instruments, (20) risks associated with restrictions contained in our Convertible Notes and Credit Facility, (21) risks associated with compliance with tax laws, (22) risks associated with the global recession and volatility and disruption in the global financial markets, (23) risks associated with implementation of our new ERP system, (24) risks associated with the Bauer, Lamiflex, Svendborg and Guardian acquisitions and integration and other acquisitions, (25) risks associated with the Company's investment in a new manufacturing facility in China, (26) risks associated with certain minimum purchase agreements we have with suppliers, (27) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (28) risks associated with interest rate swap contracts, (29) risks associated with the potential dilution of our common stock as a result of our convertible notes, (30) risks associated with our exposure to renewable energy markets, (31) risks related to regulations regarding conflict minerals, and (32) 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 1
Third-Quarter 2014 Highlights • Revenues increased 16% from the third quarter of 2013 • Non-GAAP earnings increased 13% to $12.2 million, or $0.45 per diluted share, during the quarter * • Higher than expected healthcare costs negatively impacted the quarter • Svendborg acquisition contributes as expected to the bottom line • Announced acquisition of Guardian Industries on July 1 2
End Market Review • Sales at Distribution were relatively strong • Turf and Garden sales were strong, but down from prior year due to a difficult 2013 comparable • Ag market continued to slow • Materials handling market showed broad-based growth from a year ago • Oil and gas, as well as alternative energy remained strong • Metals market showed second quarter of growth 3
Third-Quarter 2014 Financial Highlights QTD QTD Q3 2014 Q3 2013 $ Change % Change Net Sales $202.5 $175.4 $27.1 15.5% Gross Profit $62.3 $53.7 $8.6 16.0% % of Revenues 30.8% 30.6% SG&A $39.1 $31.7 $7.4 23.3% % of Revenues 19.3% 18.1% Income from operations $17.8 $18.9 ($1.1) -5.8% % of Revenues 8.8% 10.8% Net Income $6.9 $10.5 ($3.6) -34.3% % of Revenues 3.4% 6.0% Earnings Per Share: Diluted $0.25 $0.39 ($0.14) -35.9% Weighted Average Common Shares Outstanding: Diluted 27,334 26,836 498 1.9% ($ millions) 4
Non-GAAP Measures Non-GAAP Net Income (amounts in millions) Q3 2014 Q3 2013 Reported Net Income $6.9 $10.5 Restructuring costs 1.6 0.1 Amortization of inventory fair value adjustment 0.1 - European w orkers compensation claim 0.4 - Acquisition related expenses 0.0 0.3 Tax impact of above adjustments (0.6) (1) (0.1) (2) Tax impact of foreign reorganization 3.8 - Non-GAAP net income $12.2 $10.8 Non-GAAP diluted earnings per share $0.45 $0.40 (1) tax impact is calculated by multiplying the estimated effective tax rate, 27.8% by the above items (2) tax impact is calculated by multiplying the estimated effective tax rate, 33.1% by the above items Non-GAAP Operating Income (amount in millions) Q3 2014 Q3 2013 Reported Income from Operations $17.8 $18.9 Restructuring costs 1.6 0.1 Amortization of inventory fair value adjustment 0.1 - European w orkers compensation claim 0.4 - Acquisition related expenses 0.0 0.3 Non-GAAP income from operations $19.9 $19.3 5 YTD Free Cash Flow (amounts in millions) 2014 2013 $62.0 $62.2 (16.5) (14.4) Free cash flow $45.6 $47.8 Purchase of property, plant and equipment Net Cash flow s from operating activities
Balance Sheet Highlights Q3 2014 Q3 2013 Cash $43.0 $70.3 Debt: Convertible Senior Notes 85.0 85.0 Revolving Credit Facility 37.0 25.0 Term Loan Facility 137.5 96.3 Equipment Loan 5.3 3.6 Capitalized Leases and other 0.0 0.4 Mortgages 0.3 0.7 Total Debt $265.2 $210.9 Total Debt less Cash $222.2 45.3% $140.6 35.2% Shareholders' Equity $268.3 54.7% $258.9 64.8% Shareholders' Equity plus Debt, less Cash $490.5 100.0% $399.5 100.0% 6
Third-Quarter 2014 Operating Working Capital Balance Sheet (amounts in millions) Reconciliation of Operating Working Capital: Q3 2014 ⁺ Q2 2014 ⁺ Q1 2014 ⁺ Q4 2013 ⁺ Q3 2013 Accounts Receivable 117.9$ 125.4$ 120.7$ 109.1$ 99.8$ Inventories 135.4 136.3 139.7 143.7 120.6 Accounts Payable (43.9) (53.3) (52.5) (51.2) (47.5) Operating Working Capital 209.4$ 208.4$ 207.9$ 201.6$ 172.9$ ⁺ Operating Working Capital includes Svendborg 7
2014 Outlook • $815 - $825 Million in sales • $1.75 - $1.80 Non-GAAP diluted earnings per share * • $23 - $25 Million in capital expenditures • $32 - $33 Million in depreciation and amortization • Tax rate approximately 30% - 32% before discrete items 8
Summary • Columbia City consolidation is complete and serves as a showcase of lean improvements • Initial SAP implementation is complete • Profit improvement plans are making steady progress • Svendborg acquisition integration is proceeding well and it continues to be accretive to earnings as expected • Returned over $21 million to shareholders during the first 9 months of 2014 9
Discussion of Non-GAAP 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. 10
Altra Industrial Motion (NASDAQ:AIMC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Altra Industrial Motion (NASDAQ:AIMC)
Historical Stock Chart
From Apr 2023 to Apr 2024
