- Revenue increased $15.1 million to a
record $80.1 million driven primarily by organic growth
- Demonstrated strong operating
leverage with operating margin expansion of 90 basis points to
9.0%
- Achieved net income of $4.9 million,
up $1.8 million, or 59%; Diluted earnings per share increased $0.19
to $0.52
- Backlog grew 4% sequentially to a
record level of $115.7 million
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 its third quarter ended September 30, 2018.
Results include the acquisition of Maval Industries in January
2018.
“Our One Allied approach and focus on delivering market leading
solutions continued to pay off with another quarter of record
revenue and backlog as we saw strong performance across all of our
served markets,” commented Dick Warzala, Chairman and CEO.
“Importantly, our business model also demonstrated its leverage
potential with operating margin expanding to 9.0%.
“We are confident in our strategy, and with a record level of
backlog, robust new business pipeline and favorable economic
environment, we are well positioned for continued growth in revenue
and profitability.”
Third Quarter 2018 Results (Narrative compares with
prior-year period unless otherwise noted)
Record revenue of $80.1 million was up $15.1 million, or 23%.
The increase was due to growth across all of the Company’s served
markets and reflects significantly higher sales to the Vehicle
market. The change in foreign currency exchange (FX) had a $0.7
million unfavorable impact on revenue in the quarter. Sales to U.S.
customers were 55% of total sales for the quarter compared with 53%
for the same period last year, with the balance of sales to
customers primarily in Europe, Canada and Asia.
Gross profit increased $4.2 million, or 22%, to $23.8 million.
Gross margin decreased 40 basis points to 29.7%. Higher volume and
productivity helped to offset the impact of the lower margin
profile of the Maval acquisition.
Operating costs and expenses were up $2.3 million to $16.5
million; however, as a percentage of revenue, operating expenses
were down 140 basis points to 20.6%. General and administrative
expense as a percent of revenue increased 70 basis points to 10.3%
primarily due to higher incentive compensation and additional
personnel to support the Company’s growth. Engineering and
development (“E&D”) was $4.7 million, up 7%. As a percentage of
revenue, E&D decreased 90 basis points to 5.9%.
Higher gross profit combined with operating leverage drove
operating income up 37%, or $2.0 million, to $7.2 million, while
operating margin expanded 90 basis points to 9.0%.
Interest expense for the period was unchanged at $0.6
million.
The effective tax rate decreased to 26.7% from 33.1%, 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 increased $1.8 million, or 59%, to $4.9 million, or
$0.52 per diluted share, from $3.1 million, or 0.33 per diluted
share.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense and business development costs
(“Adjusted EBITDA”) was $10.8 million, up $2.5 million, or 29%. As
a percent of sales, Adjusted EBITDA was 13.5%, an increase of 60
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 all the Company’s served markets resulted in
record revenue of $236.6 million, up $50.0 million, or 27%. 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
had a favorable $5.5 million impact on revenue for the year-to-date
period.
Gross profit increased 27% to $69.8 million, and gross margin
was the same as the first nine months of 2017. Operating costs and
expenses as a percent of revenue were 21.1%, down 110 basis points.
As a result, operating income increased $6.3 million, or 46%, while
operating margin expanded 110 basis points to 8.4%.
The effective tax rate for the year-to-date period was down to
26.8% compared with 32.1% for the same period last year, due
primarily to U.S. tax reform. Net income was up $5.3 million, or
67%, to $13.3 million. Adjusted EBITDA for the period was $30.6
million, up 36%. As a percent of sales, Adjusted EBITDA was 12.9%
compared with 12.1%.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $11.4 million compared with $15.6
million at the end of 2017. Total debt was $62.5 million at the end
of the third quarter, up $9.3 million from year-end 2017 largely
due to the Maval acquisition. Debt, net of cash, was $51.1 million,
or 33.7% of net debt to capitalization, up from 30.1% at the end of
2017.
Capital expenditures of $10.6 million include investments for
productivity improvement and growth initiatives. The Company
continues to expect to invest $13 million to $16 million in capital
expenditures during fiscal 2018. The increase in capital
expenditures over the prior year is for growth capital to support
significant project wins.
Orders and Backlog Summary ($ in
thousands)
Q3 2018 Q2 2018
Q1 2018 Q4 2017 Q3
2017 Orders $ 85,081 $ 86,238 $ 80,699 $ 72,764 $ 72,964
Backlog $ 115,713 $ 111,170 $ 107,321 $ 100,708 $ 93,547
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 for the third quarter was unfavorable
$0.7 million year-over-year.
Backlog was up 24% over the prior-year period and increased 4%
since the sequential second quarter of 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 mid to later part of 2019.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
November 1, 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, November 8, 2018. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13683801 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. 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
November 1, 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.
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per share
data)
(Unaudited)
For the three months
ended For the nine months ended September 30,
September 30, 2018 2017 2018
2017 Revenue $ 80,092 $ 64,968 $ 236,649 $
186,657 Cost of goods sold 56,330 45,422
166,816 131,529 Gross profit
23,762 19,546 69,833 55,128 Operating costs and expenses: Selling
2,762 2,822 8,402 8,135 General and administrative 8,210 6,255
24,318 17,985 Engineering and development 4,692 4,389 14,610 12,984
Amortization of intangible assets 872 813
2,634 2,405 Total operating
costs and expenses 16,536 14,279 49,964 41,509 Operating income
7,226 5,267 19,869 13,619 Other expense (income): Interest expense
623 633 1,839 1,797 Other (income) expense, net (24 )
65 (118 ) 135 Total other expense, net
599 698 1,721
1,932 Income before income taxes 6,627 4,569 18,148 11,687
Provision for income taxes (1,767 ) (1,512 )
(4,859 ) (3,746 ) Net income $ 4,860 $ 3,057 $
13,289 $ 7,941 Basic earnings per share:
Earnings per share $ 0.52 $ 0.33 $ 1.44 $ 0.87
Basic weighted average common shares 9,273
9,173 9,251 9,137 Diluted
earnings per share: Earnings per share $ 0.52 $ 0.33
$ 1.42 $ 0.86 Diluted weighted average common shares
9,371 9,294 9,337
9,265 Net income $ 4,860 $ 3,057 $
13,289 $ 7,941 Foreign currency translation
adjustment (307 ) 1,829 (2,152 ) 5,608
Change in accumulated income (loss) on
derivatives
137 45 988 (178 )
Comprehensive income $ 4,690 $ 4,931 $ 12,125
$ 13,371
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share
data)
September 30,
2018
(Unaudited)
December 31,
2017
Assets Current assets: Cash and cash equivalents $ 11,357 $
15,590
Trade receivables, net of allowance for
doubtful accounts of $506 and $341 at September 30, 2018
and December 31, 2017, respectively
45,230 31,822 Inventories 44,887 32,568 Prepaid expenses and other
assets 3,490 3,460 Total current assets
104,964
83,440 Property, plant and equipment, net 43,026 38,403 Deferred
income taxes 129 14 Intangible assets, net 33,075 32,073 Goodwill
34,938 29,531 Other long term assets 5,981
4,461 Total assets $ 222,113 $ 187,922
Liabilities and Stockholders’ Equity Current liabilities:
Debt obligations 437 461 Accounts payable 24,587 15,351 Accrued
liabilities 18,051 14,270 Total current
liabilities 43,075 30,082 Long-term debt 62,021 52,694 Deferred
income taxes 3,164 3,609 Pension and post-retirement obligations
4,238 4,667 Other long term liabilities 9,132
9,523 Total liabilities 121,630 100,575 Stockholders’
Equity:
Common stock, no par value, authorized
50,000 shares; 9,476 and 9,427 shares issued and
outstanding at September 30, 2018 and December 31, 2017,
respectively
32,867 31,051
Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or
outstanding
- - Retained earnings 74,366 61,882 Accumulated other comprehensive
loss (6,750 ) (5,586 ) Total stockholders’ equity
100,483 87,347 Total Liabilities and
Stockholders’ Equity $ 222,113 $ 187,922
ALLIED MOTION TECHNOLOGIES INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
(Unaudited)
For the nine months ended September
30, 2018 2017 Cash Flows From
Operating Activities: Net income $ 13,289 $ 7,941 Adjustments
to reconcile net income to net cash provided by operating
activities (net of working capital acquired in 2017): Depreciation
and amortization 8,454 7,590 Deferred income taxes (484 ) (99 )
Stock compensation expense 1,787 1,473 Debt issue cost amortization
recorded in interest expense 113 113 Other 521 (26 ) Changes in
operating assets and liabilities: Trade receivables (11,727 )
(6,887 ) Inventories (11,067 ) (379 ) Prepaid expenses and other
assets (1,610 ) 17 Accounts payable 8,093 3,106 Accrued liabilities
3,917 2,464 Net cash provided by
operating activities 11,286 15,313
Cash Flows From
Investing Activities: Purchase of property and equipment
(10,581 ) (4,220 ) Cash paid for acquisition, net of cash acquired
(13,312 ) - Net cash used in investing
activities (23,893 ) (4,220 )
Cash Flows From Financing
Activities: Borrowings on lines-of-credit, net 17,658 (441 )
Principal payments of long-term debt (8,350 ) (9,114 ) Dividends
paid to stockholders (800 ) (709 ) Stock transactions under
employee benefit stock plans 262 355
Net cash provided by (used in) financing activities 8,770 (9,909 )
Effect of foreign exchange rate changes on cash (396 )
933 Net decrease in cash and cash equivalents (4,233
) 2,117 Cash and cash equivalents at beginning of period
15,590 15,483 Cash and cash equivalents at end
of period $ 11,357 $ 17,600
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 nine months endedSeptember 30, 2018 and
2017 is as follows:
Three Months Ended September 30,
2018 2017 Net income $ 4,860
$ 3,057 Interest expense 623 633 Provision for income tax
1,767 1,512 Depreciation and amortization
2,832 2,630
EBITDA 10,082 7,832
Stock compensation expense 694 519 Business development costs
33 -
Adjusted EBITDA
$ 10,809 $ 8,351
Nine months ended September 30,
2018 2017 Net income $ 13,289 $
7,941 Interest expense 1,839 1,797 Provision for income tax 4,859
3,746 Depreciation and amortization 8,454
7,590
EBITDA 28,441 21,074 Stock
compensation expense 1,787 1,473 Business development costs
349 -
Adjusted EBITDA
$ 30,577 $ 22,547
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181031005838/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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