- One Allied strategy drives revenue growth of 21% to a record
$96.6 million
- Gross margin expanded 140 basis points to 31.1%
- Operating income grew 22% to $8.8 million with operating
margin of 9.1%
- Net income was $4.6 million, or $0.49 per diluted share;
Excluding atypical foreign tax assessment charges, adjusted net
income* grew 12% to $5.4 million, or $0.57 per diluted
share
- Year-to-date cash generated from operations was $17.0
million, up 51%
Allied Motion Technologies Inc. (Nasdaq: AMOT)
(“Allied Motion” or “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 third quarter ended September 30, 2019. Results include the
TCI, LLC (“TCI”) acquisition that was completed December 6,
2018.
“We performed well in the quarter, delivering strong operating
results as we execute on our strategy for growth. Organic revenue
grew 10% driven by strong demand from market share gains in our
Medical and Aerospace & Defense markets. Importantly, we also
realized the positive effect that volume has on our margin
profile,” commented Dick Warzala, Chairman and CEO. “While our
bottom line was impacted by $0.08 per diluted share in the quarter
from atypical foreign tax adjustments, our results validate that
our business is capable of generating stronger earnings as we
continue to grow.”
Third Quarter 2019 Results (Narrative compares with
prior-year period unless otherwise noted)
Record revenue of $96.6 million was up $16.5 million, or 21%,
and reflects considerable growth in Medical and Aerospace &
Defense, and contributions from TCI. Revenue increased 23%,
excluding a $1.6 million unfavorable impact of changes in foreign
currency exchange rates. The Company achieved organic growth of
nearly 10%, which reflects the continued strength in the U.S. Sales
to U.S. customers were 59% of total sales for the quarter compared
with 55% from the third quarter last year, with the balance of
sales to customers primarily in Europe, Canada and Asia. 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.
Gross margin expanded 140 basis points to 31.1%, in large part
due to the higher volume as well as favorable mix across a number
of served markets and the recent acquisition of TCI.
Operating costs and expenses as a percent of revenue were up 140
basis points to 22.0%, largely due to higher selling costs related
to additional personnel and incremental intangible asset
amortization related to the TCI acquisition. General and
administrative expenses were up 10 basis points to 10.3% of
revenue, while engineering and development expense remained
unchanged at 5.9%.
Operating income increased 22% to $8.8 million as operating
margin improved 10 basis points to 9.1%.
Interest expense increased to $1.4 million on higher debt
balances that funded the TCI acquisition.
Michael Leach, Chief Financial Officer, commenting on the
foreign tax assessments in the quarter, noted, “We recorded a
higher tax provision and recognized an atypical charge in the
quarter both of which were due to tax assessments in a foreign
jurisdiction for a previous acquisition. The assessments resulted
from the outcomes of a tax audit that identified dividend and
expense payments prior to our owning the company. The withholding
tax related to the dividend is recorded in other expense and we are
exploring options to potentially recover this charge, whereas the
other audit adjustment impacted the current period’s tax provision
and is not recoverable.”
The Company recorded a $384 thousand charge in other expense and
had a $433 increase in the income tax provision related to the
unusual tax assessment in a foreign jurisdiction. As a result, net
income was $4.6 million, or $0.49 per diluted share, compared with
$4.9 million, or $0.52 per diluted share in the prior-year period.
Excluding the atypical charges, adjusted net income was up 12% to
$5.4 million, or $0.57 per diluted share. *See the attached table
for a description of non-GAAP financial measures and reconciliation
table for Adjusted Net Income and Diluted Earnings per Share.
Given the additional tax provision, the Company is increasing
its expected effective tax rate for fiscal 2019 to be in the range
of 29% to 32% from 28% to 30%.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense, business development costs and
non-income based tax assessment (“Adjusted EBITDA”) was $13.6
million, up
$2.8 million or 26%. As a percent of sales, Adjusted EBITDA was
14.1%, up 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) 2019 Results (Narrative compares with
prior-year period unless otherwise noted)
Strong demand for the Company’s products and solutions from most
of its served markets resulted in revenue of $283.2 million, up $47
million, or 20%. The impact of FX fluctuations was unfavorable $6.7
million for the year-to-date period. Sales to U.S. customers were
57% of total sales 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 23% to $86.1 million, and gross margin
was up 90 basis points to 30.4% largely due to higher volume,
favorable mix and TCI.
Operating costs and expenses as a percent of revenue were 22.0%,
up 90 basis points. As a result, operating margin remained
consistent at 8.4%.
Net income was $13.5 million. Adjusted net income was $14.4
million, up 8.0% over the prior-year period. Adjusted EBITDA for
the period was $37.5 million, up 23%. As a percent of sales,
Adjusted EBITDA was 13.3%, up 40 basis points. *See the attached
table for a description of non-GAAP financial measures and
reconciliation table for Adjusted Net Income and Adjusted
EBITDA.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $8.6 million compared with $8.7
million at the end of 2018. Total debt was $116.5 million as of
September 30, 2019, down $6.0 million from year-end 2018. Debt, net
of cash, was $107.9 million, or 48.7% of net debt to
capitalization.
Year-to-date capital expenditures were $9.3 million and included
investments for productivity improvement and growth initiatives.
The Company adjusted down its expected capital expenditure plan for
fiscal 2019 to $13 million to $15 million, with the majority
focused on the previously announced Vehicle market project wins,
off-road vehicle steering capabilities and incremental investments
related to the addition of TCI.
Mr. Leach, commented, “We have generated $17 million in cash
from operations in the first nine months, invested in growth, and
reduced debt by $6 million. Our capital priorities are
straightforward: invest in organic growth, reduce debt, and
maintain financial flexibility for acquisitions.”
Orders and Backlog Summary ($ in thousands)
Q3
2019
Q2
2019
Q1
2019
Q4
2018
Q3
2018
Orders
$
90,726
$
95,317
$
93,744
$
84,911
$
85,081
Backlog
$
125,821
$
133,507
$
130,646
$
131,997
$
115,713
The year-over-year increase in orders and backlog reflects
strength across all the Company’s served markets and the
incremental orders and backlog from the acquisition. Foreign
currency translation had an unfavorable $1.4 million impact on
third quarter orders compared with the prior-year period.
The time to convert the majority of backlog to sales is
approximately three to six months. A nominal amount of the $225
million of previously announced new Vehicle market awards are
included in the backlog. The Company is currently investing in
these programs and expects to begin shipments at very low levels by
the end of 2019, with full rate production by the end of 2021.
Conference Call and Webcast
The Company will host a conference call and webcast on Friday,
November 1, 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, dial (201) 689-8263. In addition,
the call will be webcast and may be found at:
https://www.alliedmotion.com/investor-relations/
A telephonic replay will be available from 1:00 pm ET on the day
of the call through Friday, November 8, 2019. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13694905 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
November 1, 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. Examples of forward-looking
statements include, among others, statements the Company makes
regarding expected operating results, anticipated levels of capital
expenditures, the Company’s belief that it has sufficient liquidity
to fund its business operations, expectations regarding income tax
rates and expectations with respect to the conversion of backlog to
sales. Forward-looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
the Company’s current beliefs, expectations and assumptions
regarding the future of the Company’s business, future plans and
strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements
relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict
and many of which are outside of the Company’s control. The
Company’s actual results and financial condition may differ
materially from those indicated in the forward-looking statements.
Therefore, you should not rely on any of these forward-looking
statements. Important factors that could cause our actual results
and financial condition to differ materially from those indicated
in the forward-looking statements include, among others, general
economic and business conditions, conditions affecting the
industries served by the Company and its subsidiaries, conditions
affecting the Company's customers and suppliers, competitor
responses to the Company's products and services, the overall
market acceptance of such products and services, the pace of
bookings relative to shipments, the ability to expand into new
markets and geographic regions, the success in acquiring new
business, the impact of changes in income tax rates or policies and
other factors disclosed in the Company's periodic reports filed
with the Securities and Exchange Commission. 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
For the nine months
ended
September 30,
September 30,
2019
2018
2019
2018
Revenue
$ 96,633
$ 80,092
$ 283,159
$236,649
Cost of goods sold
66,603
56,330
197,045
166,816
Gross profit
30,030
23,762
86,114
69,833
Operating costs and expenses:
Selling
4,144
2,762
12,373
8,402
General and administrative
9,932
8,177
28,451
23,969
Engineering and development
5,705
4,692
17,188
14,610
Business development
8
33
64
349
Amortization of intangible assets
1,429
872
4,291
2,634
Total operating costs and expenses
21,218
16,536
62,367
49,964
Operating income
8,812
7,226
23,747
19,869
Other expense (income):
Interest expense
1,359
623
3,974
1,839
Other (income) expense, net
140
(24)
121
(118)
Total other expense, net
1,499
599
4,095
1,721
Income before income taxes
7,313
6,627
19,652
18,148
Provision for income taxes
(2,695)
(1,767)
(6,119)
(4,859)
Net income
$ 4,618
$ 4,860
$ 13,533
$ 13,289
Basic earnings per share:
Earnings per share
$ 0.49
$ 0.52
$ 1.44
$ 1.44
Basic weighted average common shares
9,414
9,273
9,390
9,251
Diluted earnings per share:
Earnings per share
$ 0.49
$ 0.52
$ 1.43
$ 1.42
Diluted weighted average common shares
9,464
9,371
9,435
9,337
Net income
$ 4,618
$ 4,860
$ 13,533
$ 13,289
Foreign currency translation
adjustment
(2,369)
(307)
(2,708)
(2,152)
(Loss) income on derivatives
(105)
137
(803)
988
Comprehensive income
$ 2,144
$ 4,690
$ 10,022
$ 12,125
ALLIED MOTION TECHNOLOGIES
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
(Unaudited)
September 30,
December 31,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$ 8,578
$ 8,673
Trade receivables, net of allowance for
doubtful accounts of $576
and $530 at September 30, 2019 and
December 31, 2018,
respectively
56,004
43,247
Inventories
51,376
54,971
Prepaid expenses and other assets
4,082
4,003
Total current assets
120,040
110,894
Property, plant and equipment, net
49,471
48,035
Deferred income taxes
456
341
Intangible assets, net
63,762
68,354
Goodwill
52,523
52,639
Right of use asset
17,358
-
Other long-term assets
4,632
5,038
Total Assets
$ 308,242
$ 285,301
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
24,677
25,867
Accrued liabilities
23,571
18,722
Total current liabilities
48,248
44,589
Long-term debt
116,486
122,516
Deferred income taxes
3,317
3,860
Pension and post-retirement
obligations
4,279
4,293
Right of use liability
14,107
-
Other long-term liabilities
8,009
8,230
Total liabilities
194,446
183,488
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 9,600
and 9,485 shares issued and outstanding at
September 30, 2019
and December 31, 2018, respectively
36,437
33,613
Preferred stock, par value $1.00 per
share, authorized 5,000 shares;
no shares issued or outstanding
-
-
Retained earnings
89,388
76,718
Accumulated other comprehensive loss
(12,029)
(8,518)
Total stockholders’ equity
113,796
101,813
Total Liabilities and Stockholders’
Equity
$ 308,242
$ 285,301
ALLIED MOTION TECHNOLOGIES
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the nine months
ended
September 30,
2019
2018
Cash Flows From Operating
Activities:
Net income
$ 13,533
$ 13,289
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
11,071
8,454
Deferred income taxes
(563)
(484)
Stock compensation expense
2,374
1,787
Debt issue cost amortization recorded in
interest expense
131
113
Other
581
521
Changes in operating assets and
liabilities, net of acquisition:
Trade receivables
(13,643)
(11,727)
Inventories
1,664
(11,067)
Prepaid expenses and other assets
(232)
(1,610)
Accounts payable
(727)
8,093
Accrued liabilities
2,815
3,917
Net cash provided by operating
activities
17,004
11,286
Cash Flows From Investing
Activities:
Purchase of property and equipment
(9,280)
(10,581)
Cash paid for acquisition, net of cash
acquired
-
(13,312)
Net cash used in investing activities
(9,280)
(23,893)
Cash Flows From Financing
Activities:
Borrowings on long-term debt
9,091
17,658
Principal payments of long-term debt
(15,000)
(8,350)
Dividends paid to stockholders
(887)
(800)
Stock transactions under employee benefit
stock plans
(717)
262
Net cash (used in) provided by financing
activities
(7,513)
8,770
Effect of foreign exchange rate changes on
cash
(306)
(396)
Net decrease in cash and cash
equivalents
(95)
(4,233)
Cash and cash equivalents at beginning of
period
8,673
15,590
Cash and cash equivalents at end of
period
$ 8,578
$ 11,357
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, business development
costs and non-income based tax assessment), 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 and nine months ended September 30,
2019 is as follows:
Three Months Ended
Nine Months Ended
September 30, 2019
September 30, 2019
Revenue as reported
$
96,633
$
283,159
Currency impact
1,567
6,717
Revenue excluding foreign currency
exchange impacts
$
98,200
$
289,876
The Company’s calculation of Adjusted EBITDA for the three
months and nine months ended September 30, 2019 and 2018 is as
follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2019
2018
2019
2018
Net income
$ 4,618
$ 4,860
$13,533
$ 13,289
Interest expense
1,359
623
3,974
1,839
Provision for income tax
2,695
1,767
6,119
4,859
Depreciation and amortization
3,744
2,832
11,071
8,454
EBITDA
12,416
10,082
34,697
28,441
Stock compensation expense
833
694
2374
1,787
Business development costs
8
33
64
349
Non-income based tax assessment
384
-
384
-
Adjusted EBITDA
$ 13,641
$ 10,809
$ 37,519
$ 30,577
ALLIED MOTION TECHNOLOGIES
INC.
Reconciliation of GAAP Net
Income and Diluted Earnings per Share to
Non-GAAP Adjusted Net and
Diluted Earnings per Share
(In thousands)
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income
$
4,618
$
4,860
$
13,533
$
13,289
Add back:
Non-income based tax assessment
384
-
384
-
Income tax provision charge
433
-
433
-
Non-GAAP adjusted net income
$
5,435
$
4,860
$
14,350
$
13,289
Average diluted shares outstanding
9,464
9,371
9,435
9,337
Diluted earnings per share - GAAP
$
0.49
$
0.52
$
1.43
$
1.42
Diluted earnings per share - Non-GAAP
$
0.57
$
0.52
$
1.52
$
1.42
Adjusted net income and diluted EPS are defined as net income as
reported, adjusted for unusual non-recurring items. Adjusted net
income and diluted EPS are not a measure determined in accordance
with generally accepted accounting principles in the United States,
commonly known as GAAP, and may not be comparable to the measure as
used by other companies. Nevertheless, the Company believes that
providing non-GAAP information, such as adjusted net income and
diluted EPS are important for investors and other readers of the
Company’s financial statements and assists in understanding the
comparison of the current quarter’s and current year’s net income
and diluted EPS to the historical periods’ net income and diluted
EPS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005908/en/
Company: Sue Chiarmonte Allied Motion Technologies Inc.
Phone: 716-242-8634 x602 Email: sue.chiarmonte@alliedmotion.com
Investors: Deborah K. Pawlowski Kei Advisors LLC Phone:
716-843-3908 Email: dpawlowski@keiadvisors.com
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Apr 2023 to Apr 2024