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, 2018.
- Second quarter revenue increased 33%
to a record $80.0 million driven primarily by organic
growth
- Operating income grew $2.2 million,
or 56%, to $6.2 million; Operating margin expanded 120 basis points
to 7.8%
- Net Income nearly doubled to $4.2
million; Earnings per share increased $0.21 to $0.45
- Orders increased 31% over the prior
year; Backlog grew 4% sequentially to a new record level of $111.2
million
“We delivered another record revenue quarter that validates the
strength of our position with our customers and the market leading
custom solutions and quality products we offer,” commented Dick
Warzala, Chairman and CEO of Allied Motion. “We remain steadfast in
the execution of our growth strategy and expanding our value
proposition to customers, while also driving an operational culture
focused on improving quality, delivery, innovation, and cost.”
Second Quarter 2018 Results (Narrative compares with
prior-year period unless otherwise noted)
Record revenue of $80.0 million was up $19.6 million, or 33%.
The increase was due to growth across all of the Company’s served
markets and reflects significantly higher sales to the Vehicle and
Industrial/Electronics markets. Excluding the favorable effects of
foreign currency exchange (FX), second quarter revenue was $77.7
million, up 29%. Sales to U.S. customers were 52% of total sales
for the quarter compared with 54% for the same period last year,
with the balance of sales to customers primarily in Europe, Canada
and Asia.
Gross profit increased $5.6 million, or 32%, to $23.5 million,
while gross margin decreased 20 basis points to 29.4%. The gross
margin change reflects a lower margin contribution from the Maval
acquisition.
Operating costs and expenses were up $3.4 million to $17.3
million; however, as a percent of revenue, operating costs were
down 140 basis points to 21.6%. General and administrative expense
as a percent of sales increased 50 basis points to 10.4% primarily
due to higher incentive compensation and additional personnel to
support the Company’s growth. Engineering and development
(“E&D”) was $5.0 million, up 13%, though as a percent of
revenue, E&D decreased 110 basis points to 6.2%.
As a result of the gross profit increase and cost discipline,
operating income increased 56%, or $2.2 million, to $6.2 million,
and operating margin expanded 120 basis points to 7.8%.
Interest expense for the period was unchanged at $0.6
million.
The effective tax rate decreased to 27.4% from 31.8%, largely
due to lower U.S. federal tax rates from the December 2017 Tax Cuts
and Jobs Act. The Company anticipates its effective tax rate for
2018 to range from 24% to 26%.
Net income nearly doubled to $4.2 million, or $0.45 per diluted
share, from $2.2 million, or 0.24 per diluted share.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense and business development costs
(“Adjusted EBITDA”) was $10.0 million, up $3.1 million or 45%. As a
percent of sales, Adjusted EBITDA was 12.5%, an increase of 110
basis points. 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.
Year-to-Date (YTD) 2018 Results (Narrative compares with
prior-year period unless otherwise noted)
Strong demand from the all the Company’s served markets resulted
in record revenue of $156.6 million, up $34.9 million, or 29%.
Sales to U.S. customers were 52% 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 $6.3 million for the year-to-date
period.
Gross profit increased 29% to $46.1 million, and gross margin
was up 20 basis points to 29.4% largely due to more favorable mix
and higher volume.
Operating costs and expenses as a percent of revenue were 21.4%,
down 100 basis points. As a result, operating income for the period
increased $4.3 million, or 51%, while operating margin expanded 120
basis points to 8.1%.
The effective tax rate for the first half of 2018 was down to
26.8% compared with 31.4% for the same period last year, due
primarily to U.S. tax reform. Net income was up $3.5 million, or
73%, to $8.4 million.
Adjusted EBITDA for the period was $19.8 million, up 39%. As a
percent of sales, Adjusted EBITDA was 12.6% compared with
11.7%.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $15.3 million compared with $15.6
million at the end of 2017. Total debt was $64.9 million at the end
of the second quarter, up $11.8 million from year-end 2017 largely
due to the Maval acquisition in the first quarter of 2018. Debt,
net of cash, was $49.6 million, or 34.2% of net debt to
capitalization, up from 30.1% at the end of 2017.
Capital expenditures of $5.6 million included investments for
productivity improvement and growth initiatives. The Company
continues to expect to invest $13 million to $16 million in capital
expenditures during fiscal 2018. The higher level of capital
expenditures when compared with 2017 reflects success based
expenditures in support of the significant announced project
wins.
Orders and Backlog Summary ($ in thousands)
Q2
2018
Q1
2018
Q4
2017
Q3
2017
Q2
2017
Orders $ 86,238 $ 80,699 $ 72,764 $ 72,964 $ 65,754 Backlog $
111,170 $ 107,321 $ 100,708 $ 93,547 $ 85,250
The year-over-year increase in orders and backlog reflect
strength across all the Company’s served markets. The impact on
orders from FX fluctuations was favorable $2.5 million
year-over-year.
Backlog was up 30% over the prior-year period and increased
nearly 4% since first quarter 2018. The time to convert the
majority of backlog to sales is approximately three to six months.
Not included in the backlog are previously announced new business
awards of $225.0 million that are expected to begin shipping in
2019.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
August 2, 2018 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 call (201)
689-8263. 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 9, 2018. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13680956 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
2, 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,
including the ability to carve out, relocate and separate the Maval
OE business; 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, 2018 2017 2018
2017 Revenue $ 79,981 $ 60,335 $ 156,557 $ 121,689
Cost of goods sold 56,464 42,454
110,486 86,107 Gross profit 23,517 17,881
46,071 35,582 Operating costs and expenses: Selling 2,943 2,710
5,640 5,313 General and administrative 8,336 5,981 15,792 11,730
Engineering and development 4,963 4,404 9,918 8,595 Business
development 165 - 316 - Amortization of intangible assets
878 799 1,762 1,592
Total operating costs and expenses 17,285 13,894 33,428
27,230 Operating income 6,232 3,987 12,643 8,352 Other expense
(income): Interest expense 602 641 1,216 1,164 Other (income)
expense, net (200 ) 80 (94 ) 70
Total other expense, net 402 721
1,122 1,234 Income before income taxes
5,830 3,266 11,521 7,118 Provision for income taxes (1,599 )
(1,039 ) (3,092 ) (2,234 ) Net income $ 4,231
$ 2,227 $ 8,429 $ 4,884 Basic
earnings per share: Earnings per share $ 0.46 $ 0.24
$ 0.91 $ 0.54 Basic weighted average common shares
9,268 9,165 9,241
9,120 Diluted earnings per share: Earnings per share $ 0.45
$ 0.24 $ 0.90 $ 0.53 Diluted weighted
average common shares 9,356 9,265
9,321 9,250 Net income $ 4,231
$ 2,227 $ 8,429 $ 4,884 Foreign
currency translation adjustment (3,532 ) 3,105 (1,845 ) 3,779
Change in accumulated income (loss) on derivatives 247
(137 ) 851 (223 ) Comprehensive
income $ 946 $ 5,195 $ 7,435 $ 8,440
ALLIED MOTION TECHNOLOGIES
INC. CONSOLIDATED BALANCE SHEETS (In thousands,
except per share data) (Unaudited) June 30,
2018 December 31, 2017 Assets Current assets:
Cash and cash equivalents $ 15,329 $ 15,590 Trade receivables, net
of allowance for doubtful accounts of $487 and $341 at June 30,
2018 and December 31, 2017, respectively 41,267 31,822 Inventories
41,098 32,568 Prepaid expenses and other assets 3,590
3,460 Total current assets 101,284 83,440 Property,
plant and equipment, net 40,115 38,403 Deferred income taxes 53 14
Intangible assets, net 33,828 32,073 Goodwill 35,121 29,531 Other
long term assets 4,789 4,461 Total
assets $ 215,190 $ 187,922
Liabilities and
Stockholders’ Equity Current liabilities: Debt obligations 453
461 Accounts payable 22,426 15,351 Accrued liabilities
15,030 14,270 Total current liabilities 37,909
30,082 Long-term debt 64,485 52,694 Deferred income taxes 3,305
3,609 Pension and post-retirement obligations 4,705 4,667 Other
long term liabilities 9,261 9,523 Total
liabilities 119,665 100,575 Stockholders’ Equity: Common stock, no
par value, authorized 50,000 shares; 9,475 and 9,427 shares issued
and outstanding at June 30, 2018 and December 31, 2017,
respectively 32,315 31,051 Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or outstanding - -
Retained earnings 69,790 61,882 Accumulated other comprehensive
loss (6,580 ) (5,586 ) Total stockholders’ equity
95,525 87,347 Total Liabilities and
Stockholders’ Equity $ 215,190 $ 187,922
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) For the six months ended June
30, 2018 2017 Cash Flows From Operating
Activities: Net income $ 8,429 $ 4,884 Adjustments to reconcile
net income to net cash provided by operating activities (net of
working capital acquired in 2017): Depreciation and amortization
5,622 4,960 Deferred income taxes (282 ) 14 Stock compensation
expense 1,094 954 Debt issue cost amortization recorded in interest
expense 74 99 Other 133 (40 ) Changes in operating assets and
liabilities: Trade receivables (7,639 ) (4,442 ) Inventories (6,840
) 529 Prepaid expenses and other assets (504 ) 93 Accounts payable
5,788 (360 ) Accrued liabilities 1,511 692
Net cash provided by operating activities 7,386 7,383
Cash Flows From Investing Activities: Purchase of property
and equipment (5,555 ) (2,677 ) Cash paid for acquisition, net of
cash acquired (13,312 ) - Net cash used in
investing activities (18,867 ) (2,677 )
Cash Flows From
Financing Activities: Borrowings on lines-of-credit, net 14,252
- Principal payments of long-term debt (2,500 ) (6,000 ) Dividends
paid to stockholders (522 ) (473 ) Stock transactions under
employee benefit stock plans 261 355
Net cash provided by (used in) financing activities 11,491 (6,118 )
Effect of foreign exchange rate changes on cash (271 )
662 Net decrease in cash and cash equivalents (261 )
(750 ) Cash and cash equivalents at beginning of period
15,590 15,483 Cash and cash equivalents at end
of period $ 15,329 $ 14,733
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures (In
thousands) (Unaudited)
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, 2018 and 2017 is as follows:
Three Months Ended June 30,
2018
2017 Net income $ 4,231 $ 2,227 Interest expense 602
641 Provision for income tax 1,599 1,039 Depreciation and
amortization 2,831 2,510
EBITDA $ 9,263 $ 6,417 Stock
compensation expense 598 488 Business development costs
165 -
Adjusted EBITDA
$ 10,026 $
6,905 Six months ended June 30,
2018
2017 Net income $ 8,429 $ 4,884 Interest expense 1,216 1,164
Provision for income tax 3,092 2,234 Depreciation and amortization
5,622 4,960
EBITDA
18,359 13,242 Stock compensation expense 1,094 954
Business development costs 316
-
Adjusted EBITDA $
19,769 $ 14,196
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180801006005/en/
Company:Allied Motion Technologies Inc.Sue Chiarmonte,
716-242-8634
x602sue.chiarmonte@alliedmotion.comorInvestor:Kei Advisors
LLCDeborah K. Pawlowski,
716-843-3908dpawlowski@keiadvisors.com
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Sep 2023 to Sep 2024