Allied Motion Technologies Inc. (NASDAQ:AMOT) (“Company”), a
designer and manufacturer that sells precision motion control
products and solutions to the global market, today reported
financial results for the fourth quarter and full year ended
December 31, 2017.
- Fourth quarter revenue increased
18.1% to $65.4 million; Achieved record revenue in 2017 of $252.0
million
- Reported earnings per share for the
year was $0.87, which reflects a $0.35 per share one-time charge
associated with the impact of tax reform
- Operating income doubled to $5.2
million in the quarter
- 2017 orders up 8.6% to a record $272
million; Backlog grew to record level of $100.7 million
- Not included in the backlog are
previously announced new business awards of $225.0 million that
were received in the last eleven months and will start shipping in
2019
- Total debt down $18.3 million to
$53.2 million at year-end; Net debt to capitalization ratio
improved to 30.1% from 43.6% at the end of 2016
- Cash generated from operations was
$25.4 million in 2017, up from $14.3 million in 2016
- Acquired the original equipment
(“OE”) steering business of Maval Industries, LLC in January 2018;
Addition of OE product line enables Allied to provide a fully
integrated steering system solution to its customers
“Our fourth quarter results were very strong and drove record
revenue for the year,” commented Dick Warzala, Chairman and CEO of
Allied Motion. “During 2017, we gained greater traction and market
share in many of our served markets, won important and significant
new awards, generated considerable cash and made progress
streamlining the organization. Absent the one-time impact of tax
reform, our earnings were also measurably higher for both the
quarter and the year. And, our emphasis on utilizing our Allied
Systematic Tool kit (AST) to drive continuous improvements in
Quality, Delivery, Cost and Innovation, contributed measurably to
our solid performance. AST is an integral element of Allied’s
culture.”
Mr. Warzala added, “Our contract wins over the last year are a
testament to our ability to build highly reliable, quality products
and custom engineered solutions, and they substantiate the
strategic investments we have made to grow and diversify our
business. We won significant, new business in not only our Vehicle
market, but also in our Medical, Industrial, and Aerospace and
Defense markets. With these wins, we are creating a larger base of
business that enhances our ability to realize continuous and
sustainable organic growth well into the future.”
Fourth Quarter 2017 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue was $65.4 million, up $10.0 million, or 18.1%. The
increase reflects growth across all of the Company’s served
markets, to include significantly higher sales to the Vehicle
market. Excluding the favorable effects of foreign currency
exchange (FX), fourth quarter revenue was $62.8 million, up 13.5%.
Sales to U.S. customers were 49% of total sales for the quarter
compared with 51% for the same period last year, with the balance
of sales to customers primarily in Europe, Canada and Asia.
Gross profit for the quarter rose $3.8 million to $20.6 million,
while gross margin improved 120 basis points to 31.4%. The
expansion in gross margin was due to more favorable mix and higher
volume.
Operating costs and expenses were up $1.2 million to $15.4
million primarily due to increased investments in the sales and
engineering organization. Within operating expenses, engineering
and development (“E&D”) was $4.6 million, up 14.4%, although as
a percent of revenue, E&D decreased 20 basis points to
7.0%.
Operating income was $5.2 million, double the prior-year-period,
and operating margin expanded 320 basis points to 7.9%.
Interest expense decreased $1.1 million, or nearly 63%, to $0.7
million in the quarter, which was due to reduced debt levels and
lower cost of debt with the new credit facility established in
November 2016.
The effective tax rate for the quarter was 97.9% compared with
24.5% in the prior-year period. The higher rate reflects an
estimated transition tax of $3.1 million on the deemed repatriation
of foreign earnings resulting from the U.S. Tax Cuts and Jobs Act
(“the Tax Act”). This one-time expense was recorded to taxes in the
fourth quarter and negatively impacted diluted earnings per share
$0.35, resulting in fourth quarter net income of $95 thousand, or
$0.01 per diluted share. The Tax Act contains other provisions that
did not materially impact the Company, including the revaluation of
deferred tax balances.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense and business development costs
(“Adjusted EBITDA”) was $8.6 million, up $2.8 million or 47.5%. As
a percent of sales, Adjusted EBITDA was 13.1% compared with 10.5%
in the prior-year period. The Company believes that, when used in
conjunction with measures prepared in accordance with U.S.
generally accepted accounting principles, Adjusted EBITDA, which is
a non-GAAP measure, helps in the understanding of its operating
performance. See the attached table for a description of non-GAAP
financial measures and reconciliation table for Adjusted
EBITDA.
Full Year 2017 Results (Narrative compares with
prior-year period unless otherwise noted)
Record revenue of $252.0 million was up $6.1 million, or 2.5%.
Increased demand from the Industrial/Electronics, Medical and
Aerospace & Defense markets as well as improvement in
distribution sales more than offset lower demand in the Company’s
Vehicle market. Sales to U.S. customers were 53% of total sales
compared with 54% for the same period last year, with the balance
of sales to customers primarily in Europe, Canada and Asia. The
impact of FX fluctuations was favorable $1.7 million for the
year.
Gross profit increased nearly 4% to $75.7 million, and gross
margin was up 30 basis points to 30.0%.
Operating costs and expenses were up $2.8 million, or 5.1%, to
$56.9 million. The increase was due to reasons similar to those in
the quarter. E&D was up $1.4 million, or 8.5%, to $17.5 million
and increased as a percent of revenue to 7.0% from 6.6%. The
increase in E&D investments was to develop standardized product
platforms and provide customized motion solutions for customers. As
a result, operating income was $18.8 million, down slightly from
the prior-year period.
Interest expense decreased $4.0 million, or 61.6%, to $2.5
million due to the debt refinancing in November 2016 and lower debt
balances.
The effective tax rate for 2017 was 50.2%, due to implementation
of the Tax Act. As a result, net income for the year was $8.0
million, or $0.87 per diluted share. The Company anticipates its
effective tax rate for 2018 to range from 22% to 26%.
Full year Adjusted EBITDA was $31.1 million, up 2% over 2016. As
a percent of sales, Adjusted EBITDA was 12.3% compared with 12.4%
in 2016.
Balance Sheet and Cash Flow Review
Cash and cash equivalents at the end of 2017 were $15.6 million
compared with $15.5 million at the end of 2016. Cash provided by
operations was $25.4 million, an increase of $11.1 million, and was
used to pay down debt and fund $6.2 million of capital expenditures
during the year.
The Company expects to invest $13 million to $16 million in
capital expenditures during fiscal 2018. The higher level of
capital expenditures is to support the significant recent project
wins announced over the last year.
Total debt was $53.2 million at year-end, down $18.3 million
from 2016. Debt, net of cash, was $37.6 million, or 30.1% of net
debt to capitalization, down from 43.6% at the end of 2016.
Orders and Backlog Summary ($ in
thousands)
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Orders $ 72,764 $ 72,964 $ 65,754 $ 60,459 $ 56,543 Backlog $
100,708 $ 93,547 $ 85,250 $ 77,954 $ 78,602
FY
2017
FY
2016
$
Change
%
Change
Orders $ 271,941 $ 250,369 $ 21,572 8.6%
The year-over-year increase in orders and backlog reflect
strength across all of the Company’s served markets. The impact on
orders from FX fluctuations was favorable $2.6 million in the
fourth quarter and $2.0 million in the full year period.
Backlog was up 28% over the prior year-end period and increased
nearly 8% since the end of the trailing third quarter. The time to
convert the majority of backlog to sales is approximately three to
six months.
Mr. Warzala concluded, “We have begun 2018 with a strong
backlog, an excellent pipeline of opportunities and an acquisition
that enhances our value proposition by enabling us to provide
fully-integrated steering solutions to our customers. We are
excited about the momentum we are building and we will stay on
course by executing our growth strategy to create additional value
for all of our stakeholders.”
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
March 15, 2018 at 11:00 am ET. During the conference call,
management will review the financial and operating results and
discuss Allied Motion’s corporate strategy and outlook. A question
and answer session will follow.
To listen to the live call, participants can call (778)
327-3988. In addition, the call will be webcast live and may be
found at: http://www.alliedmotion.com/investors
A telephonic replay will be available from 2:00 pm ET on the day
of the call through Thursday, March 22, 2018. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
10004297 or access the webcast replay via the Company’s website. A
transcript will also be posted to the website once available.
About Allied Motion Technologies Inc.
Allied Motion (NASDAQ: AMOT) designs, manufactures and sells
precision and specialty motion control components and systems used
in a broad range of industries within our major served markets,
which include Vehicle, Medical, Aerospace & Defense, and
Industrial/Electronics. The Company is headquartered in Amherst,
NY, has global operations and sells into markets across the United
States, Canada, South America, Europe and Asia.
Allied Motion is focused on motion control applications and is
known worldwide for its expertise in electro-magnetic, mechanical
and electronic motion technology. Its products include brush and
brushless DC motors, brushless servo and torque motors, coreless DC
motors, integrated brushless motor-drives, gear motors, gearing,
modular digital servo drives, motion controllers, incremental and
absolute optical encoders, and other associated motion
control-related products.
The Company’s growth strategy is focused on becoming the motion
solution leader in its selected target markets by leveraging its
“technology/know how” to develop integrated precision motion
solutions that utilize multiple Allied Motion technologies to
“change the game” and create higher value solutions for its
customers. The Company routinely posts news and other important
information on its website at http://www.alliedmotion.com/.
Safe Harbor Statement
The statements in this news release and in the Company’s March
15, 2018 conference call that relate to future plans, events or
performance are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate, or imply future
results, performance, or achievements, and may contain the word
“believe,” “anticipate,” “expect,” “project,” “intend,” “will
continue,” “will likely result,” “should” or words or phrases of
similar meaning. Forward-looking statements involve known and
unknown risks and uncertainties that may cause actual results to
differ materially from the expected results described in the
forward-looking statements. The risks and uncertainties include
those associated with: the domestic and foreign general business
and economic conditions in the markets we serve, including
political and currency risks and adverse changes in local legal and
regulatory environments; the introduction of new technologies and
the impact of competitive products; the ability to protect the
Company’s intellectual property; our ability to sustain, manage or
forecast its growth and product acceptance to accurately align
capacity with demand; the continued success of our customers and
the ability to realize the full amounts reflected in our order
backlog as revenue; the loss of significant customers or the
enforceability of the Company’s contracts in connection with a
merger, acquisition, disposition, bankruptcy, or otherwise; our
ability to meet the technical specifications of our customers; the
performance of subcontractors or suppliers and the continued
availability of parts and components; changes in government
regulations; the availability of financing and our access to
capital markets, borrowings, or financial transactions to hedge
certain risks; the Company's ability to realize the annual interest
expense savings from its debt refinancing; the ability to attract
and retain qualified personnel who can design new applications and
products for the motion industry; the ability to implement our
corporate strategies designed for growth and improvement in profits
including to identify and consummate favorable acquisitions to
support external growth and the development of new technologies;
the ability to successfully integrate an acquired business into our
business model without substantial costs, delays, or problems; our
ability to control costs, including the establishment and operation
of lowcost region manufacturing and component sourcing
capabilities; and other risks and uncertainties detailed from time
to time in the Company’s SEC filings. Actual results, events and
performance may differ materially. Readers are cautioned not to
place undue reliance on these forward-looking statements as a
prediction of actual results. Any forward-looking statement speaks
only as of the date on which it is made. New risks and
uncertainties arise over time, and it is not possible for us to
predict the occurrence of those matters or the manner in which they
may affect us. The Company has no obligation or intent to release
publicly any revisions to any forward looking statements, whether
as a result of new information, future events, or otherwise.
FINANCIAL TABLES FOLLOW
ALLIED MOTION TECHNOLOGIES
INC.CONSOLIDATED STATEMENTS OF INCOME(In thousands,
except per share data)
For the three months
ended
For the year ended
December 31, December 31, 2017
2016 2017 2016 Revenue $
65,355 $ 55,343 $ 252,012 $ 245,893 Cost of goods sold
44,804 38,615 176,333
172,889 Gross profit 20,551 16,728 75,679 73,004 Operating
costs and expenses: Selling 2,844 2,496 10,979 9,986 General and
administrative 6,941 6,782 24,926 24,333 Engineering and
development 4,558 3,985 17,542 16,170 Business development 213 87
213 428 Amortization of intangible assets 814
795 3,219 3,204 Total operating
costs and expenses 15,370 14,145 56,879 54,121 Operating income
5,181 2,583 18,800 18,883 Other expense (income): Interest expense
677 1,823 2,474 6,449 Other expense, net 55
(179 ) 190 (369 ) Total other expense, net
732 1,644 2,664
6,080 Income before income taxes 4,449 939 16,136 12,803
Provision for income taxes (4,354 ) (230 )
(8,100 ) (3,725 ) Net income $ 95 $ 709 $
8,036 $ 9,078 Basic earnings per share:
Earnings per share $ 0.01 $ 0.08 $ 0.88 $ 1.01
Basic weighted average common shares 9,198
9,057 9,153 9,011 Diluted
earnings per share: Earnings per share $ 0.01 $ 0.08
$ 0.87 $ 1.00 Diluted weighted average common shares
9,303 9,174 9,275
9,105
ALLIED MOTION TECHNOLOGIES
INC.CONSOLIDATED BALANCE SHEETS(In thousands, except
per share data)
December 31, 2017
2016 Assets Current assets: Cash and cash
equivalents $ 15,590 $ 15,483 Trade receivables, net of allowance
for doubtful accounts of $341 and $362 at December 31, 2017 and
2016, respectively 31,822 26,104 Inventories 32,568 31,098 Prepaid
expenses and other assets 3,460 3,120
Total current assets 83,440 75,805 Property, plant and equipment,
net 38,403 37,474 Deferred income taxes 14 923 Intangible assets,
net 32,073 34,252 Goodwill 29,531 27,522 Other long-term assets
4,461 3,943 Total assets $ 187,922
$ 179,919
Liabilities and Stockholders’ Equity
Current liabilities: Debt obligations 461 936 Accounts payable
15,351 13,204 Accrued liabilities 14,270
10,678 Total current liabilities 30,082 24,818 Long-term
debt 52,694 70,483 Deferred income taxes 3,609 3,266 Pension and
post-retirement obligations 4,667 4,381 Other long term liabilities
9,523 4,685 Total liabilities 100,575
107,633 Stockholders’ Equity: Common stock, no par value,
authorized 50,000 shares; 9,427 and 9,374 shares issued and
outstanding at December 31, 2017 and 2016, respectively 31,051
29,503 Preferred stock, par value $1.00 per share, authorized 5,000
shares; no shares issued or outstanding - - Retained earnings
61,882 54,786 Accumulated other comprehensive loss (5,586 )
(12,003 ) Total stockholders’ equity 87,347
72,286 Total Liabilities and Stockholders’ Equity $
187,922 $ 179,919
ALLIED MOTION TECHNOLOGIES
INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)
For the year ended December
31,
2017 2016 Cash Flows From Operating
Activities: Net income $ 8,036 $ 9,078 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation and amortization 10,274 9,749 Deferred income taxes
3,713 1,770 Provision for doubtful accounts 39 167 Provision for
excess and obsolete inventory 480 351 Provision for warranty 234
(138 ) Write-off of debt issue costs on Prior Credit agreement
recorded in interest expense - 1,052 Debt issue cost amortization
recorded in interest expense 165 380 Restricted stock compensation
2,026 1,893 Other (756 ) (652 ) Changes in operating assets and
liabilities, excluding changes due to acquisition: (Increase) in
trade receivables, net (4,051 ) (3,719 ) Decrease (increase) in
inventories 18 (928 ) (Increase) decrease in prepaid expenses and
other assets (328 ) 69 Increase (decrease) in accounts payable
1,277 (956 ) Increase (decrease) in accrued liabilities and other
liabilities 4,280 (3,813 ) Net cash provided
by operating activities 25,407 14,303
Cash Flows From
Investing Activities: Purchase of property and equipment (6,201
) (5,188 ) Consideration paid for acquisition, net of cash acquired
- (16,205 ) Net cash used in investing
activities (6,201 ) (21,393 )
Cash Flows From Financing
Activities: (Repayments) borrowings on lines-of-credit, net
(518 ) (5,709 ) Principal payments of long-term debt (18,389 )
(67,125 ) Proceeds from issuance of long-term debt - 76,321 Payment
of debt issuance costs - (745 ) Dividends paid to stockholders (959
) (942 ) Shares withheld for payment of employee payroll taxes
(1,513 ) (1,054 ) Stock transactions under employee benefit stock
plans 1,213 834 Net cash provided by
(used in) financing activities (20,166 ) 1,580 Effect of foreign
exchange rate changes on cash 1,067 (285 ) Net
increase (decrease) in cash and cash equivalents 107 (5,795 ) Cash
and cash equivalents at beginning of period 15,483
21,278 Cash and cash equivalents at end of period
15,590 15,483
ALLIED MOTION TECHNOLOGIES
INC.Reconciliation of Non-GAAP Financial Measures(In
thousands)
In addition to reporting net income, a U.S. generally accepted
accounting principle (“GAAP”) measure, the Company presents
Adjusted EBITDA (earnings before interest, income taxes,
depreciation and amortization, stock compensation expense, business
development costs and insurance recoveries), which is a non-GAAP
measure. The Company believes Adjusted EBITDA is often a useful
measure of a Company’s operating performance and is a significant
basis used by the Company’s management to evaluate and compare the
core operating performance of its business from period to period by
removing the impact of the capital structure (interest), tangible
and intangible asset base (depreciation and amortization), taxes,
stock-based compensation expense, business development costs
related to acquisitions, and other items that are not indicative of
the Company’s core operating performance. Adjusted EBITDA does not
represent and should not be considered as an alternative to net
income, operating income, net cash provided by operating activities
or any other measure for determining operating performance or
liquidity that is calculated in accordance with generally accepted
accounting principles.
The Company’s calculation of Adjusted EBITDA for the three
months and full year ended December 31, 2017 and 2016 is as
follows:
Three Months Ended December 31,
2017 2016
Net income $ 95 $ 709 Interest expense 677 1,823
Provision for income tax 4,354 230 Depreciation and amortization
2,684 2,440
EBITDA $ 7,810 $ 5,202 Stock
compensation expense 553 523 Business development costs
213 87
Adjusted
EBITDA $ 8,576
$ 5,812 Full Year Ended
December 31, 2017
2016 Net income $ 8,036 $ 9,078 Interest expense
2,474 6,449 Provision for income tax 8,100 3,725 Depreciation and
amortization 10,274
9,749
EBITDA $ 28,884 $
29,001 Stock compensation expense 2,026 1,893 Business
development costs 213 428 Insurance recoveries
- (823 )
Adjusted EBITDA
$ 31,123 $
30,499
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180314006125/en/
Company:Allied Motion Technologies Inc.Sue Chiarmonte,
716-242-8634
x602sue.chiarmonte@alliedmotion.comorInvestors:Kei Advisors
LLCDeborah K. Pawlowski, 716-843-3908dpawlowski@keiadvisors.com
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