- Revenue increased $17.3 million to a
record $93.9 million on strong organic growth of nearly 13%,
excluding FX
- Record orders of $93.7 million, up
10% over the sequential fourth quarter
- Diluted earnings per share increased
7% to $0.48
- TCI integration is progressing as
planned
Allied Motion Technologies Inc. (Nasdaq: AMOT) (“Company”), a
designer and manufacturer that sells precision and specialty
controlled motion products and solutions to the global market,
today reported financial results for its first quarter ended March,
31, 2019. Results include the TCI, LLC (“TCI”) acquisition that was
completed December 6, 2018.
“Our One Allied approach continues to prove effective, driving
strong organic growth and record orders as we expanded our market
share in many of our served markets. Further, our acquisition of
TCI is meeting our expectations as it has expanded our offerings,
brought excellent talent and broadened our markets. TCI’s new
projects and customers complemented our organic growth to drive
total revenue up 23%,” commented Dick Warzala, Chairman and CEO.
“Gross margin was unchanged as we increased our investment in
R&D and other key resources to facilitate growth opportunities.
There were also some atypical impacts to gross margin in the
quarter, including increased costs for certain electronic
assemblies that we are focusing on reducing over the next several
months. With our focus on Allied Systematic Tools (AST), we expect
to drive improvements in all areas of our business to make further
inroads into desirable end markets and to continuously improve
quality, delivery, innovation and cost.”
First Quarter 2019 Results (Narrative compares with
prior-year period unless otherwise noted)
Record revenue of $93.9 million was up $17.3 million, or 22.6%.
The increase was due to growth across all of the Company’s served
markets. The increase reflects organic growth of 12.8%, when
excluding a $3.1 million unfavorable impact of changes in foreign
currency exchange. The Company believes that Revenue excluding
foreign currency exchange impacts, which is a non-GAAP measurement,
is a useful measure in analyzing organic sales results. See the
attached table for a description of non-GAAP financial measures and
reconciliation of Revenue to Revenue excluding foreign currency
exchange impacts. Sales to U.S. customers were 54% of total sales
for the quarter compared with 53% from the first quarter last year,
with the balance of sales to customers primarily in Europe, Canada
and Asia.
Gross margin was unchanged at 29.5%. The recent acquisition of
TCI was margin accretive, but that benefit was offset by two
atypical items, which negatively impacted gross margin by a total
of approximately 90 basis points. The first relates to a supplier
who is discontinuing operations and subsequently increased their
prices for any new orders. The second item was the timing of
investment into tooling and prototype samples related to new
Vehicle market programs. Both impacts are expected to moderate over
the coming quarters.
Operating costs and expenses as a percent of revenue were up 60
basis points to 21.7% largely due to additional personnel and
engineering to support the Company’s growth, higher stock
compensation expense and incremental intangible asset amortization
of $562 thousand related to the TCI acquisition. General and
administrative expense as a percent of revenue decreased 20 basis
points to 9.5%, and engineering and development as a percent of
revenue decreased 30 basis points to 6.2%.
Operating income increased 14% to $7.3 million. Operating margin
was 7.8% compared with 8.4%. Lower operating margin reflected the
impact of atypical items on gross margin, investments in growth and
higher amortization expense from the TCI acquisition.
Interest expense increased $566 thousand to $1.2 million on
higher debt balances that funded acquisitions.
The effective tax rate was 27.5% compared with 26.2% in the
prior-year period. Net income increased to $4.5 million, or $0.48
per diluted share, compared with $4.2 million, or $0.45 per diluted
share. The Company anticipates its effective tax rate for fiscal
2019 to be in the range of 26% to 29%.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense and business development costs
(“Adjusted EBITDA”) was $11.7 million, up $2.0 million or 20%. As a
percent of sales, Adjusted EBITDA was 12.5%, down 20 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.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $10.2 million compared with $8.7
million at the end of 2018. Total debt was $129.1 million as of
March 31, 2019, up $6.5 million from year-end 2018. Debt, net of
cash, was $118.9 million, or 52.7% of net debt to
capitalization.
Capital expenditures were $2.5 million and included investments
for productivity improvement and growth initiatives. The Company
expects to invest $15 million to $18 million in capital
expenditures during fiscal 2019. Most of the capital expenditures
are to support the significant Vehicle market project wins that
will begin ramping by year-end, off-road vehicle steering
capabilities and incremental investments related to the addition of
TCI.
Orders and Backlog Summary ($ in thousands)
Q1
2019
Q4
2018
Q3
2018
Q2
2018
Q1
2018
Orders $ 93,744 $ 84,911 $ 85,081 $ 86,238 $ 80,699 Backlog
$
130,646
$ 131,997 $ 115,713 $ 111,170 $ 107,321
The year-over-year increase in orders and backlog reflect recent
acquisitions and strength across all the Company’s served markets.
Foreign currency translation had an unfavorable $2.9 million impact
on the first quarter compared with the prior-year period.
Backlog was up 22% over the prior-year period and down slightly
from a record level in the sequential fourth 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 late 2019.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
May 2, 2019 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, May 9, 2019. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13689434 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 controlled motion products and solutions
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 controlled motion 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, active (electronic) and
passive (magnetic) filters for power quality and harmonic issues,
and other controlled motion-related products.
The Company’s growth strategy is focused on being the controlled
motion solutions leader in its selected target markets by
leveraging its “technology/know how” to develop integrated
precision 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 May 2,
2019 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 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.CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
COMPREHENSIVE INCOME(In thousands, except per share
data)(Unaudited)
For the three months ended March 31,
2019 2018
Revenue $ 93,896 $ 76,576 Cost of goods sold 66,234
54,022 Gross profit 27,662 22,554 Operating costs and
expenses: Selling 4,093 2,697 General and administrative 8,950
7,456 Engineering and development 5,807 4,955 Business development
53 151 Amortization of intangible assets 1,432
884 Total operating costs and expenses 20,335 16,143
Operating income 7,327 6,411 Other expense (income): Interest
expense 1,180 614 Other (income) expense, net (18 )
106 Total other expense, net 1,162 720
Income before income taxes 6,165 5,691 Provision for income
taxes (1,695 ) (1,493 ) Net income $ 4,470 $
4,198 Basic earnings per share: Earnings per share $
0.48 $ 0.45 Basic weighted average common shares
9,340 9,251 Diluted earnings per share:
Earnings per share $ 0.48 $ 0.45 Diluted weighted
average common shares 9,375 9,325
Net income $ 4,470 $ 4,198 Foreign currency
translation adjustment (887 ) 1,687 Income (loss) on derivatives
(262 ) 604 Comprehensive income $ 3,321
$ 6,489
ALLIED MOTION TECHNOLOGIES
INCCONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except per share data)(Unaudited)
March 31, 2019
December 31,2018
Assets Current assets: Cash and cash equivalents $ 10,184 $
8,673 Trade receivables, net of allowance for doubtful accounts of
$560 and $530 at March 31, 2019 and December 31, 2018, respectively
53,795 43,247 Inventories 52,962 54,971 Prepaid expenses and other
assets 3,733 4,003 Total current assets
120,674 110,894 Property, plant and equipment, net 48,083 48,035
Deferred income taxes 424 341 Intangible assets, net 66,788 68,354
Goodwill 52,362 52,639 Right of use asset 18,978 - Other long-term
assets 4,708 5,038 Total Assets $
312,017 $ 285,301
Liabilities and Stockholders’
Equity Current liabilities: Accounts payable $ 26,225 $ 25,867
Accrued liabilities 18,944 18,722 Total
current liabilities 45,169 44,589 Long-term debt 129,051 122,516
Deferred income taxes 3,604 3,860 Pension and post-retirement
obligations 4,316 4,293 Right of use liability 15,818 - Other
long-term liabilities 7,261 8,230 Total
liabilities 205,219 183,488 Stockholders’ Equity: Common stock, no
par value, authorized 50,000 shares; 9,607 and 9,485 shares issued
and outstanding at March 31, 2019 and
December 31, 2018, respectively
35,564 33,613 Preferred stock, par value $1.00 per share,
authorized 5,000 shares; no shares issued or outstanding - -
Retained earnings 80,901 76,718 Accumulated other comprehensive
loss (9,667 ) (8,518 ) Total stockholders’ equity
106,798 101,813 Total Liabilities and
Stockholders’ Equity $ 312,017 $ 285,301
ALLIED MOTION TECHNOLOGIES
INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)(Unaudited)
For the three months ended March 31,
2019 2018 Cash
Flows From Operating Activities: Net income $ 4,470 $ 4,198
Adjustments to reconcile net income to net cash provided by
operating activities Depreciation and amortization 3,659 2,791
Deferred income taxes (297 ) 2,822 Stock compensation expense 674
496 Debt issue cost amortization recorded in interest expense 43 37
Other 347 609 Changes in operating assets and liabilities, net of
acquisition: Trade receivables (10,941 ) (8,231 ) Inventories 1,291
(3,887 ) Prepaid expenses and other assets (161 ) (1,408 ) Accounts
payable 490 5,479 Accrued liabilities (2,014 ) (1,211
) Net cash (used in) provided by operating activities (2,439 )
1,695
Cash Flows From Investing Activities: Purchase
of property and equipment (2,505 ) (2,222 ) Cash paid for
acquisitions - (13,312 ) Net cash used in
investing activities (2,505 ) (15,534 )
Cash Flows From
Financing Activities: Borrowings on long term debt 6,568 14,500
Principal payments of long-term debt - (4,350 ) Stock transactions
under employee benefit stock plans (63 ) 849
Net cash provided by financing activities 6,505 10,999 Effect of
foreign exchange rate changes on cash (50 ) 253
Net increase (decrease) in cash and cash equivalents 1,511
(2,587 ) Cash and cash equivalents at beginning of period
8,673 15,590 Cash and cash equivalents at end
of period $ 10,184 $ 13,003
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 Revenue
excluding foreign currency exchange impacts and Adjusted EBITDA
(earnings before interest, income taxes, depreciation and
amortization, stock compensation expense, and business development
costs), which are non-GAAP measures.
The Company believes that Revenue excluding foreign currency
exchange impacts is a useful measure in analyzing organic sales
results. The Company excludes the effect of currency translation
from revenue for this measure because currency translation is not
under management’s control, is subject to volatility and can
obscure underlying business trends. The portion of revenue
attributable to currency translation is calculated as the
difference between the current period revenue and the current
period revenue after applying foreign exchange rates from the prior
period.
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 Revenue excluding foreign currency
exchange impacts for the three months ended March 31, 2019 is as
follows:
Three Months Ended
March 31, 2019 Revenue as reported $ 93,896 Currency impact
3,140 Revenue excluding foreign currency exchange
impacts $ 97,036
The Company’s calculation of Adjusted EBITDA for the three
months ended March 31, 2019 and 2018 is as follows:
Three Months Ended March
31, 2019
2018 Net income $ 4,470
$ 4,198 Interest expense 1,180 614 Provision for income tax
1,695 1,493 Depreciation and amortization
3,659 2,791
EBITDA
11,004 9,096 Stock compensation expense 674 496
Business development costs 53
151
Adjusted EBITDA
$ 11,731
$ 9,743
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190501006021/en/
Company:Sue ChiarmonteAllied Motion Technologies
Inc.Phone: 716-242-8634 x602Email:
sue.chiarmonte@alliedmotion.com
Investors:Deborah K. PawlowskiKei Advisors LLCPhone:
716-843-3908Email: dpawlowski@keiadvisors.com
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