UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
April 30, 2015
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 April 30, 2015, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the first quarter ended March 31, 2015. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On May 1, 2015, the Company will hold a conference call with investors to discuss unaudited first 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 April 30, 2015.
 
 
99.2
  
Charts to be used during the investor conference call on May 1, 2015.




EXHIBIT
INDEX
  
 
 
 
99.1
  
Press release of Altra Industrial Motion Corp., dated April 30, 2015.
 
 
99.2
  
Charts to be used during the investor conference call on May 1, 2015.




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: April 30, 2015






Altra Reports First-Quarter 2015 Results


BRAINTREE, Mass., April 30, 2015 - 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*:
 
Quarter Ended
 
Quarter Ended

 
March 31, 2015
 
March 31, 2014
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.
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
%
 
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

 
 
 
 
 
 
 
 
 
 
 
Weighted Average common shares outstanding
 
 
 
 
Basic
26,280

 
26,733

 
Diluted
26,357

 
27,444

 
 
 
 
 
 
Net income per share
 
 
 
 
Basic
$
0.36

 
$
0.43

 
Diluted
$
0.36

 
$
0.41

 
 
 
 
 
 
Reconciliation of Non-GAAP Income From Operations:
 
 
 
 
 
 
 
 
 
Income from operations
$
15,653

 
$
19,645

 
 
 
 
 
 
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

 
 
 
 
 
 
Reconciliation of Non-GAAP Net Income:
 
 
 
 
 
 
 
 
 
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

(1)
$
0.48

(2)
 
 
 
 
 
(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 30.5% by the above items
(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.6% by the above items


Consolidated Balance Sheets
 
 
 
In Thousands of Dollars
March 31, 2015
 
December 31, 2014
 
(unaudited)
 
 
Assets:
 
 
 
 Current Assets
 
 
 
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

 
 
 
 
Liabilities, non-controlling interest and stockholders' equity
 
 
 
Current liabilities
 
 
 
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

 
 
 
 
 
 
 
 
Reconciliation to operating working capital:
 
 
 
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

 
 
 
 


 
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
 
 
 
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
 
 
 
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

 
 
 
 
Reconciliation to free cash flow:
 
 
 
Net cash flows from operating activities
12,774

 
19,073

Purchase of property, plant and equipment
(7,731
)
 
(5,617
)
 
 
 
 
Free cash flow *
$
5,043

 
$
13,456

 
 
 
 






Altra Industrial Motion Corp.
Selected Segment Data
Quarter Ended
In Thousands of Dollars, except per share amount
March 31, 2015
 
March 31, 2014
 
(Unaudited)
 
(Unaudited)
 
 
 
 
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

 
 
 
 
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




First-Quarter 2015 Results May 1, 2015 10:00 AM ET Dial In Number 877-407-8293 Domestic 201-689-8349 International Webcast at www.altramotion.com Replay Number Through May 15, 2015 877-660-6853 Domestic 201-612-7415 International Conference ID: # 13607063 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 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. 1

 
First-Quarter 2015 Highlights • Global economic environment and end market sluggishness were as expected • Revenues decreased 7.9% from the first quarter of 2014, primarily from foreign exchange • Non-GAAP earnings were $11.1 million, or $0.42 per diluted share, during the quarter * • Ag and mining are down more than expected • US Dollar strength adversely impacted our top-line • Restructuring and cost reduction actions implemented in the quarter and are expected to continue throughout 2015 2

 
End Market Review • Sales at Distribution were down slightly year over year • Turf and Garden sales were up compared to a very strong first quarter a year ago and we expect 2015 to be a strong year for this market • Ag market weaker than expected • Transportation was flat compared to the prior year • Oil and gas performed slightly better than expected • Alternative energy was up modestly during the quarter, primarily driven by Europe and Asia • Mining was down year over year and flat sequentially 3

 
First-Quarter 2015 Financial Highlights QTD QTD Q1 2015 Q1 2014 $ Change % Change Net Sales $193.4 $210.1 ($16.7) -7.9% Gross Profit $58.5 $61.8 ($3.3) -5.3% % of Revenues 30.2% 29.4% SG&A $36.3 $38.3 ($2.0) -5.2% % of Revenues 18.8% 18.2% Income from operations $15.7 $19.6 ($3.9) -19.9% % of Revenues 8.1% 9.3% Net Income $9.4 $11.4 ($2.0) -17.5% % of Revenues 4.9% 5.4% Earnings Per Share: Diluted $0.36 $0.41 ($0.05) -12.2% Non-GAAP Diluted * $0.42 $0.48 ($0.06) -12.5% Weighted Average Common Shares Outstanding: Diluted 26,357 27,444 (1,087) -4.0% ($ millions) 4

 
First-Quarter 2015 Selected Segment Data QTD QTD Q1 2015 Q1 2014 $ Change % Change Clutches and Brakes Net Sales $101.6 $113.0 ($11.4) -10.1% Income from operations $11.7 $12.9 ($1.2) -9.3% % of Net Sales 11.5% 11.4% Couplings Net Sales $31.9 $31.0 $0.9 2.9% Income from operations $2.9 $3.5 ($0.6) -17.1% % of Net Sales 9.1% 11.3% Gearing and Power Transmission Components Net Sales $61.5 $67.3 ($5.8) -8.6% Income from operations $5.4 $5.5 ($0.1) -1.8% % of Net Sales 8.8% 8.2% ($ millions) 5

 
Non-GAAP Measures * Non-GAAP Net Income (amounts in millions) Q1 2015 Q1 2014 Reported Net Income $9.4 $11.4 Restructuring costs 1.8 - Amortization of inventory fair value adjustment - 2.2 Acquisition related expenses 0.7 0.4 Tax impact of above adjustments (0.8) (1) (0.8) (2) Non-GAAP net income $11.1 $13.1 Non-GAAP diluted earnings per share $0.42 $0.48 (1) tax impact is calculated by multiplying the estimated effective tax rate, 30.5% by the above items (2) tax impact is calculated by multiplying the estimated effective tax rate, 31.6% by the above items Non-GAAP Operating Income (amount in millions) Q1 2015 Q1 2014 Reported Income from Operations $15.7 $19.6 Restructuring costs 1.8 - Amortization of inventory fair value adjustment - 2.2 Acquisition related expenses 0.7 0.4 Non-GAAP income from operations $18.1 $22.2 6 YTD Free Cash Flow (amounts in millions) 2015 2014 $12.8 $19.1 (7.7) (5.6) Free cash flow $5.0 $13.5 Purchase of property, plant and equipment Net Cash flow s from operating activities

 
Balance Sheet Highlights Balance Sheet Highlights (amounts in millions) Q1 2015 Q1 2014 Cash $47.4 $61.8 Total Debt $269.5 $282.3 Total Debt less Cash $222.1 47.6% $220.5 44.2% Shareholders' Equity $244.7 52.4% $278.7 55.8% Shareholders' Equity plus Debt, less Cash $466.8 100.0% $499.2 100.0% 7 Continue to maintain strong balance sheet

 
First-Quarter 2015 Operating Working Capital * Balance Sheet (amounts in millions) Reconciliation of Operating Working Capital: Q1 2015 Q4 2014 Q3 2014 Q2 2014 Q1 2014 Accounts Receivable 113.0$ 106.5$ 117.9$ 125.4$ 120.7$ Inventories 127.6 132.7 135.4 136.3 139.7 Accounts Payable (47.5) (44.3) (43.9) (53.3) (52.5) Operating Working Capital 193.1$ 194.9$ 209.4$ 208.4$ 207.9$ 8

 
2015 Outlook • $760 - $780 Million in sales • $1.60 - $1.75 Non-GAAP diluted earnings per share * • $24 - $26 Million in capital expenditures • $30 - $32 Million in depreciation and amortization • Tax rate approximately 30% - 32% before discrete items 9

 
Summary • Strategic pricing continues to add to gross margin as expected • Bauer consolidation is on schedule and should be completed shortly • Returned $4.6 million to shareholders through stock repurchases • Initiated restructuring activities during the quarter and will continue to focus on cost reduction throughout 2015 • Our balance sheet is solid and we will continue to pursue strategic investments 10

 
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. 11

 
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