Allied also announces the reorganization of
its North America operations
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 second quarter ended June 30, 2017.
“The second quarter results were generally in line with our
expectations given the persistent weakness in our Vehicle market,”
commented Dick Warzala, Chairman and CEO of Allied Motion.
“Encouragingly, on a trailing twelve-month basis, we have achieved
considerable growth within our Medical, Industrial/Electronics and
Aerospace & Defense markets. Notably, we are seeing very strong
response to our solutions for factory automation. Another area of
focus has been on expanding our channels to market through the use
of distributors. Though still a small contributor to total revenue,
early indications have been positive.”
Furthering One Allied by Reorganizing Motor Operations in
North America
The Company announced that it is reorganizing and realigning its
North America motor operations into one business as Allied Motion -
North American Motors which will report to Robert P. Maida, the
Company’s Vice President of Operational Excellence. This new
structure enables Allied Motion to unlock and scale innovation
while unifying processes across the organization, to significantly
increase its value proposition and help insure the Company “wins”
those opportunities critical to its future. Mr. Maida’s lean
manufacturing knowledge and broad business experience provides the
leadership required to better position the Company for long-term
growth and profitability.
Mr. Warzala commented, “Through the year, we have been adapting
operations to address lower volume from our Vehicle market, and are
now implementing major organizational changes to our motor
operations in North America to eliminate redundancies and
accelerate efforts to capture operational and sales synergies. The
reorganization will align sales, engineering and manufacturing with
our target markets to increase market penetration. We believe these
changes will further our One Allied approach to meet customers’
needs through a more collaborative organization and improve our
speed to market with new solutions.”
Second Quarter 2017 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue was $60.3 million, down $5.5 million, or 8.4%. The
change reflects higher sales to the Industrial/Electronics and
Medical markets as well as a significant increase in distribution
sales, more than offset by sluggish demand within the Vehicle
market and the timing of some Aerospace business. Excluding the
unfavorable effects of foreign currency exchange (FX), second
quarter revenue was $61.3 million, down $4.5 million, or 6.9%, from
the prior-year period.
Sales to U.S. customers were 54% of total sales for the quarter
compared with 55% for the same period last year, with the balance
of sales to customers primarily in Europe, Canada and Asia.
Gross profit was $17.9 million, or 29.6% of revenue, compared
with $19.9 million, or 30.2% of revenue. The 60 basis point decline
in gross margin was due to lower volume.
Total operating costs and expenses were up slightly by $0.2
million, or 1.8%, to $13.9 million. General and administrative
(G&A) expenses were $6.0 million. G&A expenses declined
more than 10% when excluding a $0.8 million insurance proceed
benefit from last year’s second quarter. The decline was the result
of synergies, cost control and lower incentive compensation.
As a percent of sales, selling expenses were up 50 basis points
to 4.5%, and reflected the addition of new sales management and
other personnel additions. The $0.1 million in business development
costs in the 2016 second quarter was carryover from the Heidrive
acquisition.
Engineering and development (“E&D”) was up 5.5%, or $0.2
million, to $4.4 million and increased as a percent of revenue to
7.3% from 6.3%. The increase in E&D investments were focused on
customer specific motion solutions and reflects the growing
pipeline of motion solution opportunities.
Operating income was $4.0 million compared with $6.2
million.
Given the lower cost of debt with the new credit facility in
2016, interest expense decreased $1.0 million, or nearly 60%, to
$0.6 million.
The effective tax rate in the first quarter was 31.8%. The
Company anticipates its effective tax rate for 2017 to be
approximately 29% to 32%.
Net income was $2.2 million, or $0.24 per diluted share,
compared with $3.2 million, or $0.34 per diluted share.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense, and business development costs
(“Adjusted EBITDA”) was $6.9 million, or 11.4% of revenue, compared
with $8.7 million, or 13.2%, 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 tables
for a description of non-GAAP financial measures and reconciliation
tables for Constant Currency and Adjusted EBITDA.
Year-to-date (YTD) 2017 Results (Narrative compares with
prior-year period unless otherwise noted)
The same factors affecting the second quarter results had a
similar impact on results in the 2017 first half. Sales to U.S.
customers were 54% of total sales on a year-to-date basis compared
with 55% for the same period last year.
G&A expenses declined $0.6 million, or 4.5%, to $11.7
million and when excluding the insurance benefit from 2016, G&A
was down 10%. E&D as a percent of revenue increased to 7.1% in
the first half of 2017 from 6.4%. Net income was $4.9 million, or
$0.53 per diluted share, for the first half of 2017.
Balance Sheet and Cash Flow Review
Cash and cash equivalents at the end of the second quarter were
$14.7 million compared with $15.5 million at 2016 year-end.
Year-to-date cash provided by operations was $7.4 million, up
measurably from $1.7 million during the first half of 2016. The
increase reflects working capital changes, particularly in the
prior-year period which had more cash used for trade receivables
and settlement of liabilities due to the Heidrive acquisition.
Capital expenditures of $2.7 million included productivity and
growth initiatives. Capital expenditures in 2017 are expected to be
somewhat similar to 2016, at approximately $5 million to $6
million. Debt was reduced by $5.5 million, using cash generated
from operations and cash on hand, to $65.9 million at quarter-end
compared with $71.4 million at year-end 2016. Debt, net of cash,
was $51.2 million, or 38.5% of net debt to capitalization.
Orders and Backlog Summary ($ in thousands)
Q2 2017 Q1 2017
Q4 2016 Q3 2016 Q2
2016 Orders $ 65,754
$
60,459
$
56,543
$
59,088
$
68,347
Backlog $ 85,250
$
77,954
$
78,602
$
77,683
$
80,742
The sequential quarterly increase in orders was mostly the
result of strength in the Company’s Medical, Industrial, and
Aerospace & Defense markets. The Company also saw increased
demand through distributors. The decrease in orders compared with
the prior-year second quarter reflect softness in the Company’s
Vehicle market. Excluding the negative $1.0 million impact of FX,
orders were $66.8 million in the 2017 second quarter, down $1.6
million, or 2%, from the prior year.
Backlog was up 5.6% over the prior-year period and a more
substantial 9.4% since the end of the sequential 2017 first
quarter. The time to convert the majority of backlog to sales is
approximately three to six months. The recent incremental increase
in backlog is considered more long-term than typical, and is
expected to be converted to sales within the next twelve
months.
Mr. Warzala concluded, “Orders have been strengthening
throughout the year and we ended the quarter with a record backlog.
Given the nature of the backlog, we do not expect to see the full
benefit of the increase until 2018.”
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
August 3, 2017 at 10:00 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 dial (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 1:00 pm ET on the day
of the call through Thursday, August 10, 2017. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
10003155 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 August
3, 2017 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 low cost 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)
(Unaudited)
For the three months ended For the six months
ended June 30, June 30, 2017
2016 2017
2016 Revenue $ 60,335 $
65,835 $ 121,689 $ 129,510 Cost of goods sold 42,454
45,971 86,107 91,141
Gross margin 17,881 19,864 35,582 38,369 Operating costs and
expenses: Selling 2,710 2,635 5,313 5,059 General and
administrative 5,981 5,878 11,730 12,287 Engineering and
development 4,404 4,174 8,595 8,224 Business development - 135 -
218 Amortization of intangible assets 799 828
1,592 1,607 Total operating
costs and expenses 13,894 13,650 27,230 27,395 Operating income
3,987 6,214 8,352 10,974 Other expense (income): Interest expense
641 1,590 1,164 3,122 Other expense, net 80
(130 ) 70 (115 ) Total other expense, net
721 1,460 1,234
3,007 Income before income taxes 3,266 4,754 7,118 7,967
Provision for income taxes (1,039 ) (1,561 )
(2,234 ) (2,419 ) Net income $ 2,227 $ 3,193 $
4,884 $ 5,548 Basic earnings per share:
Earnings per share $ 0.24 $ 0.34 $ 0.54 $ 0.60
Basic weighted average common shares 9,165
9,343 9,120 9,312 Diluted
earnings per share: Earnings per share $ 0.24 $ 0.34
$ 0.53 $ 0.60 Diluted weighted average common shares
9,265 9,343 9,250
9,312
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share
data)
June 30,2017
December 31,2016
Assets (Unaudited) Current Assets: Cash and cash equivalents
$ 14,733 $ 15,483 Trade receivables, net of allowance for doubtful
accounts of $358 and $362 at June 30, 2017 and December 31, 2016,
respectively 31,558 26,104 Inventories 31,408 31,098 Prepaid
expenses and other assets 2,984 3,120
Total current assets 80,683 75,805 Property, plant and equipment,
net 37,947 37,474 Deferred income taxes 485 923 Intangible assets,
net 33,311 34,252 Goodwill 28,763 27,522 Other long term assets
4,209 3,943 Total assets $ 185,398
$ 179,919
Liabilities and Stockholders’ Equity
Current Liabilities: Debt obligations 959 936 Accounts payable
13,393 13,204 Accrued liabilities 11,840
10,678 Total current liabilities 26,192 24,818 Long-term
debt 64,963 70,483 Deferred income taxes 3,135 3,266 Pension and
post-retirement obligations 4,348 4,381 Other long term liabilities
5,246 4,685 Total liabilities 103,884
107,633 Stockholders’ Equity: Common stock, no par value,
authorized 50,000 shares; 9,452and 9,374 shares issued and
outstanding at June 30, 2017 andDecember 31, 2016, respectively
30,748 29,503 Preferred stock, par value $1.00 per share,
authorized 5,000shares; no shares issued or outstanding - -
Retained earnings 59,213 54,786 Accumulated other comprehensive
loss (8,447 ) (12,003 ) Total stockholders’ equity
81,514 72,286 Total Liabilities and
Stockholders’ Equity $ 185,398 $ 179,919
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
For the six months ended June 30,
2017 2016 Cash
Flows From Operating Activities: Net income $ 4,884 $ 5,548
Adjustments to reconcile net income to net cash provided by
operating activities (net of working capital acquired in 2016):
Depreciation and amortization 4,960 4,850 Deferred income taxes 14
859 Stock compensation expense 954 974 Debt issue cost amortization
recorded in interest expense 99 - Other (40 ) (314 ) Changes in
operating assets and liabilities: Trade receivables (4,442 ) (8,992
) Inventories 529 689 Prepaid expenses and other assets 93 1,389
Accounts payable (360 ) (39 ) Accrued liabilities 692
(3,289 ) Net cash provided by operating activities 7,383
1,675
Cash Flows From Investing Activities: Purchase
of property and equipment (2,677 ) (2,382 ) Consideration paid for
acquisition, net of cash acquired ($2,329) -
(16,049 ) Net cash used in investing activities (2,677 ) (18,431 )
Cash Flows From Financing Activities: Borrowings on
lines-of-credit, net - 9,534 Principal payments of long-term debt
(6,000 ) (3,750 ) Dividends paid to stockholders (473 ) (473 )
Stock transactions under employee benefit stock plans 355
268 Net cash (used in) provided by financing
activities (6,118 ) 5,579 Effect of foreign exchange rate changes
on cash 662 261 Net decrease in cash
and cash equivalents (750 ) (10,916 ) Cash and cash equivalents at
beginning of period 15,483 21,278 Cash
and cash equivalents at end of period $ 14,733 $ 10,362
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, and
business development costs), 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 and
six months ended June 30, 2017 and 2016 is as follows:
Three months ended June 30,
2017
2016 Net income $ 2,227 $ 3,193
Interest expense 641 1,590 Provision for income tax 1,039 1,561
Depreciation and amortization 2,510
2,580
EBITDA 6,417 8,924
Stock compensation expense 488 461 Business development costs - 135
Insurance recoveries -
(823 )
Adjusted EBITDA $ 6,905
$ 8,697 Six
months ended June 30,
2017 2016 Net income $
4,884 $ 5,548 Interest expense 1,164 3,122 Provision
for income tax 2,234 2,419 Depreciation and amortization
4,960 4,850
EBITDA
13,242 15,939 Stock compensation expense 954 974
Business development costs - 218 Insurance recoveries
- (823 )
Adjusted EBITDA
$ 14,196 $ 16,308
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial
Measures
(In thousands)
Constant Currency Presentation
The Company believes constant currency information provides
valuable supplemental information that facilitates period-to-period
comparisons of the company's business performance. The constant
currency presentation, which is a non-GAAP measure, excludes the
impact of fluctuations in foreign currency exchange rates. Constant
currency results are calculated by translating current period
results in local currency using the prior year's currency
conversion rate. The following table reconciles reported amounts to
constant currency amounts for the three and six months ended June
30, 2017.
Three months ended June 30, 2017
$ in thousands
% increase (decrease)compared
with prioryear amounts
Revenue 2017 revenue, as reported $ 60,335 -8.4 % Currency
impact 974 1.5 % 2017 revenue, at 2016 exchange rates $
61,309 -6.9 %
Six months ended June
30, 2017 $ in thousands
% increase (decrease)compared
with prioryear amounts
Revenue 2017 revenue, as reported $ 121,689 -6.0 % Currency
impact 1,876 1.4 % 2017 revenue, at 2016 exchange rates $
123,565 -4.6 %
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170802006468/en/
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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