Altra Industrial Motion Corp. (Nasdaq: AIMC) (“Altra” or the
“Company”), a leading global manufacturer and supplier of motion
control, power transmission and automation products, today
announced unaudited financial results for the third-quarter ended
September 30, 2020.
Q3 Financial
Highlights
- Third quarter 2020 net sales were
$437.8 million, down 1.2% compared with $442.9 million in the third
quarter of 2019. Power Transmission Technologies (PTT) segment
sales were down 9.6% and Automation & Specialty (A&S)
segment sales were up 7.1% compared with the prior year.
- For the third quarter of 2020, the
Company reported net income of $38.3 million, or $0.59 per diluted
share, compared with net income of $25.7 million, or $0.40 per
diluted share, in the third quarter of 2019.
- Non-GAAP Net Income in the third
quarter of 2020 was $56.5 million, or $0.87 per diluted share. This
is compared with Non-GAAP Net Income of $44.3 million, or $0.69 per
diluted share, in the third quarter of 2019.*
- Non-GAAP Adjusted EBITDA in the
third quarter of 2020 was $101.8 million, or $23.3% of net sales,
compared with $89.0 million, or 20.1% of net sales, in the third
quarter of 2019.*
- Operating income margin in the third
quarter of 2020 was 14.9%, compared with operating income margin of
11% in the third quarter of 2019. Non-GAAP operating income margin
in the third quarter of 2020 was 19.6%, compared with 16.5% in the
third quarter of 2019.*
- Cash flow from operations for the
year to date period ended September 30, 2020 was $161.8 million,
compared with cash flow from operations of $180.4 million for the
same year to date period in the prior year. Non-GAAP Free Cash Flow
for the year to date period ended September 30, 2020 was $137.5
million, compared with Non-GAAP Free Cash Flow of $143.5 million
for the same year to date period in the prior year. Non-GAAP
Adjusted Free Cash Flow, which excludes the impact of the interest
rate swap termination payment, was $172.2 million and $143.5
million for the year to date periods ended September 30, 2020 and
2019, respectively.*
- Paid down $60.0 million on the
Company’s outstanding term loan in the third quarter of 2020. At
the end of the third quarter, Altra’s cash balance and availability
under the revolving credit facility were $238.7 million and $294.8
million, respectively.*
Management Comments
“We turned in another excellent quarter as we capitalized on
greater-than-expected demand strength, leveraged our market
leadership to outperform in several businesses and drove
significant improvements to the bottom line,” said Carl
Christenson, Altra’s Chairman and Chief Executive Officer. “All of
our operating businesses exceeded expectations, with demand
especially strong for Class 8 trucks in China, and in the medical
and renewable energy markets. Our aggressive cost-reduction actions
led to excellent margin performance, strong cash flow generation
and effective debt reduction. I continue to be amazed by the
resilience and dedication of our team as they maintained safe
workplaces across the organization, delivered innovative products
to customers, and focused on future growth opportunities, all while
delivering these excellent results.
“We recently passed the two-year anniversary of Altra’s
transformative merger with four of Fortive Corporation’s Automation
and Specialty (A&S) businesses and we are delighted by the
success of our integration from both a cultural and business
standpoint. The broad diversity of our end markets as a result of
the merger has clearly helped mitigate the financial impact of the
current economic environment. Now, we are executing on our
strategic plans to drive organic growth across our end markets,
capitalizing on our enhanced cash-generative business model and we
are enthusiastic about the increasing pipeline of opportunities
from cross-selling activities.
“We are confident about our future as we close out 2020, and
have raised our annual revenue and EPS guidance. Additionally, as a
result of our growing confidence in our end markets and our strong
cash flow performance, Altra’s Board of Directors approved an
increase to the quarterly dividend by 50% to six cents per share.
Longer term, we are excited by Altra’s growth opportunities and are
increasingly confident about Altra’s ability to thrive as a premier
industrial company for the long term,” concluded Christenson.
Business Outlook
Altra is raising its guidance for revenue, GAAP EPS, non-GAAP
EPS, non-GAAP Adjusted EBITDA and non-GAAP Adjusted Free Cash Flow.
While it is difficult to predict the severity and duration of the
pandemic, this guidance is management’s best estimate and practical
assessment of the financial impact of COVID-19 to the Company’s
business at this time.
Altra is updating guidance for full year 2020 as follows:
- Full-year 2020 sales in the range of
$1,690 million to $1,710 million, up from prior guidance of $1,580
million to $1,640 million.
- GAAP diluted EPS in the range of a
loss of $0.55 to a loss of $0.46, compared to prior guidance of a
loss of $1.16 to a loss of $0.94.
- Non-GAAP diluted EPS in the range of
$2.70 to $2.82, up from prior guidance of $2.05 to $2.30.*
- Non-GAAP adjusted EBITDA in the
range of $355.0 million to $370.0 million, up from prior guidance
of $305.0 million to $330.0 million.*
- Tax rate for the full year of
approximately 20% to 21% (compared to prior guidance of 21% to 23%)
before discrete items, capital expenditures in the range of $34
million to $40 million (compared to prior guidance of $40 to $45
million), and depreciation and amortization in the range of $125
million to $128 million (compared to prior guidance of $124 to $127
million).
- Non-GAAP Adjusted Free cash flow in
the range of $210 million to $225 million, up from prior guidance
of $160 million to $200 million.*
Reconciliations of Non-GAAP
Disclosures
(Amounts in Millions of Dollars,
except per share
information)
*Reconciliation of Non-GAAP Net Income:
|
|
Quarter Ended September 30, |
|
|
Year to Date Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net (loss)/income |
|
$ |
38.3 |
|
|
$ |
25.7 |
|
|
$ |
(56.7 |
) |
|
$ |
89.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring costs |
|
$ |
2.4 |
|
|
$ |
6.2 |
|
|
$ |
5.5 |
|
|
$ |
11.7 |
|
Acquisition related stock
compensation expense |
|
|
0.4 |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
2.6 |
|
Acquisition related
amortization expense |
|
|
17.5 |
|
|
|
17.5 |
|
|
|
52.3 |
|
|
|
52.9 |
|
Acquisition related
expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
Automation and Specialty
acquisition purchase price adjustment |
|
|
(0.8 |
) |
|
|
— |
|
|
|
(0.8 |
) |
|
|
— |
|
Non-cash amortization of
interest rate swap expense |
|
|
3.4 |
|
|
|
— |
|
|
|
5.6 |
|
|
|
— |
|
Impairment of intangible
assets - trademarks |
|
|
— |
|
|
|
— |
|
|
|
8.4 |
|
|
|
— |
|
Cross currency interest rate
swap settlement fee |
|
|
— |
|
|
|
— |
|
|
|
0.9 |
|
|
|
— |
|
Tax impact of above
adjustments |
|
|
(4.7 |
) |
|
|
(5.8 |
) |
|
|
(15.6 |
) |
|
|
(16.2 |
) |
2019 tax benefit due to income
tax rate change |
|
|
— |
|
|
|
— |
|
|
|
(2.8 |
) |
|
|
— |
|
Impairment of intangible
assets - goodwill |
|
|
— |
|
|
|
— |
|
|
|
139.1 |
|
|
|
— |
|
Non-GAAP net income* |
|
$ |
56.5 |
|
|
$ |
44.3 |
|
|
$ |
137.3 |
|
|
$ |
141.6 |
|
Non-GAAP diluted earnings per
share* |
|
$ |
0.87 |
|
|
$ |
0.69 |
|
|
$ |
2.12 |
|
|
$ |
2.20 |
|
*Reconciliation of Non-GAAP Free Cash Flow and Non-GAAP Adjusted
Free Cash Flow
|
|
Quarter Ended September 30, |
|
|
Year to Date Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net cash flows from operating
activities |
|
$ |
88.1 |
|
|
$ |
84.3 |
|
|
$ |
161.8 |
|
|
$ |
180.4 |
|
Purchase of property, plant and
equipment |
|
$ |
(7.0 |
) |
|
$ |
(12.8 |
) |
|
|
(24.3 |
) |
|
$ |
(36.9 |
) |
Non-GAAP Free cash flow* |
|
$ |
81.1 |
|
|
$ |
71.5 |
|
|
$ |
137.5 |
|
|
$ |
143.5 |
|
Payment for interest rate swap
settlement |
|
|
— |
|
|
|
— |
|
|
|
34.7 |
|
|
|
— |
|
Non-GAAP Adjusted free cash
flow* |
|
$ |
81.1 |
|
|
$ |
71.5 |
|
|
$ |
172.2 |
|
|
$ |
143.5 |
|
*Reconciliation of Net Debt
|
|
|
September 30,
2020 |
|
|
December 31,
2019 |
|
Debt |
|
|
$ |
1,512.7 |
|
|
$ |
1,604.0 |
|
Cash |
|
|
|
(238.7 |
) |
|
|
(167.3 |
) |
Net debt* |
|
|
$ |
1,274.0 |
|
|
$ |
1,436.7 |
|
*Reconciliation of Non-GAAP Income From Operations:
|
Quarter Ended September 30, |
|
|
Year to Date Ended September 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
(Loss)/Income from
operations |
$ |
65.4 |
|
|
$ |
48.5 |
|
|
$ |
19.5 |
|
|
$ |
172.0 |
|
Income from operations as a
percent of net sales |
|
14.9 |
% |
|
|
11.0 |
% |
|
|
1.5 |
% |
|
|
12.4 |
% |
Restructuring costs |
$ |
2.4 |
|
|
$ |
6.2 |
|
|
$ |
5.5 |
|
|
$ |
11.7 |
|
Acquisition related stock
compensation expense |
|
0.4 |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
2.6 |
|
Acquisition related amortization
expense |
|
17.5 |
|
|
|
17.5 |
|
|
|
52.3 |
|
|
|
52.9 |
|
Impairment of goodwill and
intangible asset |
|
— |
|
|
|
— |
|
|
|
147.5 |
|
|
|
— |
|
Acquisition related expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
Non-GAAP income from operations* |
$ |
85.7 |
|
|
$ |
72.9 |
|
|
$ |
226.2 |
|
|
$ |
239.9 |
|
Non-GAAP Income from
operations as a percent of net sales |
|
19.6 |
% |
|
|
16.5 |
% |
|
|
17.8 |
% |
|
|
17.2 |
% |
*Reconciliation of GAAP to Non-GAAP Operating Income and
Operating Income Margin
Selected Statement of
Income Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended September 30, 2020 |
|
|
Quarter Ended September 30, 2019 |
|
|
|
GAAP Operating Income |
|
|
Adjustments |
|
|
Non-GAAP Operating Income* |
|
|
GAAP Operating Income |
|
|
Adjustments |
|
|
Non-GAAP Operating Income* |
|
Net sales |
|
$ |
437.8 |
|
|
$ |
— |
|
|
$ |
437.8 |
|
|
$ |
442.9 |
|
|
$ |
— |
|
|
$ |
442.9 |
|
Cost of sales |
|
|
273.7 |
|
|
|
— |
|
|
|
273.7 |
|
|
|
285.9 |
|
|
|
— |
|
|
|
285.9 |
|
Gross profit |
|
|
164.1 |
|
|
|
— |
|
|
|
164.1 |
|
|
|
157.0 |
|
|
|
— |
|
|
|
157.0 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
82.5 |
|
|
|
17.9 |
|
|
|
64.6 |
|
|
|
87.9 |
|
|
|
18.2 |
|
|
|
69.7 |
|
Research and development expenses |
|
|
13.8 |
|
|
|
— |
|
|
|
13.8 |
|
|
|
14.4 |
|
|
|
— |
|
|
|
14.4 |
|
Restructuring costs |
|
|
2.4 |
|
|
|
2.4 |
|
|
|
— |
|
|
|
6.2 |
|
|
|
6.2 |
|
|
|
— |
|
(Loss)/Income from
Operations |
|
$ |
65.4 |
|
|
$ |
20.3 |
|
|
$ |
85.7 |
|
|
$ |
48.5 |
|
|
$ |
24.4 |
|
|
$ |
72.9 |
|
GAAP and Non-GAAP Income from
operations as a percent of net sales |
|
|
14.9 |
% |
|
|
|
|
|
|
19.6 |
% |
|
|
11.0 |
% |
|
|
|
|
|
|
16.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to Date Ended September 30, 2020 |
|
|
Year to Date Ended September 30, 2019 |
|
|
|
GAAP Operating Income |
|
|
Adjustments |
|
|
Non-GAAP Operating Income* |
|
|
GAAP Operating Income |
|
|
Adjustments |
|
|
Non-GAAP Operating Income* |
|
Net sales |
|
$ |
1,272.8 |
|
|
$ |
— |
|
|
$ |
1,272.8 |
|
|
$ |
1,392.2 |
|
|
$ |
— |
|
|
$ |
1,392.2 |
|
Cost of sales |
|
|
812.3 |
|
|
|
— |
|
|
|
812.3 |
|
|
|
893.3 |
|
|
|
— |
|
|
|
893.3 |
|
Gross profit |
|
|
460.5 |
|
|
|
— |
|
|
|
460.5 |
|
|
|
498.9 |
|
|
|
— |
|
|
|
498.9 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general & administrative expenses |
|
|
245.4 |
|
|
|
53.7 |
|
|
|
191.7 |
|
|
|
270.8 |
|
|
|
56.2 |
|
|
|
214.6 |
|
Impairment of goodwill and intangible asset |
|
|
147.5 |
|
|
|
147.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Research and development expenses |
|
|
42.6 |
|
|
|
— |
|
|
|
42.6 |
|
|
|
44.4 |
|
|
|
— |
|
|
|
44.4 |
|
Restructuring costs |
|
|
5.5 |
|
|
|
5.5 |
|
|
|
— |
|
|
|
11.7 |
|
|
|
11.7 |
|
|
|
— |
|
Income from
Operations |
|
$ |
19.5 |
|
|
$ |
206.7 |
|
|
$ |
226.2 |
|
|
$ |
172.0 |
|
|
$ |
67.9 |
|
|
$ |
239.9 |
|
GAAP and Non-GAAP Income from
operations as a percent of net sales |
|
|
1.5 |
% |
|
|
|
|
|
|
17.8 |
% |
|
|
12.4 |
% |
|
|
|
|
|
|
17.2 |
% |
*Reconciliation of Non-GAAP Adjusted EBITDA and Non-GAAP
Adjusted EBITDA Margin:
|
Quarter Ended September 30, |
|
|
2020 |
|
|
2019 |
|
Net (loss)/income |
$ |
38.3 |
|
|
$ |
25.7 |
|
|
|
|
|
|
|
|
|
Asset impairment and other,
net |
|
(1.1 |
) |
|
|
(1.3 |
) |
Automation and Specialty
acquisition purchase price adjustment |
|
(0.8 |
) |
|
|
— |
|
Tax expense |
|
9.4 |
|
|
|
5.0 |
|
Interest expense |
|
18.0 |
|
|
|
18.2 |
|
Depreciation expense |
|
14.9 |
|
|
|
14.6 |
|
Acquisition related amortization
expense |
|
17.5 |
|
|
|
17.5 |
|
Stock compensation expense |
|
3.2 |
|
|
|
3.1 |
|
Restructuring costs |
|
2.4 |
|
|
|
6.2 |
|
Non-GAAP adjusted EBITDA |
$ |
101.8 |
|
|
$ |
89.0 |
|
Non-GAAP adjusted EBITDA as a
percent of net sales |
|
23.3 |
% |
|
|
20.1 |
% |
*Reconciliation of 2020 Non-GAAP Net Income Guidance and
Non-GAAP Diluted EPS Guidance:
|
|
Projected Fiscal Year 2020 Net Income |
|
|
Projected Fiscal Year 2020 Diluted EPS |
Net (loss) and diluted
earnings per share |
|
($35.9 - $29.6) |
|
|
($0.55 - $0.46) |
Restructuring costs |
|
6.1 - 8.1 |
|
|
|
Cross currency interest rate
swap settlement fee |
|
|
0.9 |
|
|
|
|
Automation and Specialty
acquisition purchase price adjustment |
|
|
(0.8) |
|
|
|
|
Acquisition related stock
compensation expense |
|
|
1.8 |
|
|
|
|
Acquisition related
amortization expense |
|
69.4 - 70.2 |
|
|
|
Impairment of intangibles
assets - trademarks |
|
|
8.4 |
|
|
|
|
Non-cash amortization of
interest rate swap expense |
|
|
9.0 |
|
|
|
|
Tax impact of above
adjustments (1) (2) |
|
(19.9 - 21.4) |
|
|
|
Impairment of intangible
assets - goodwill |
|
|
139.1 |
|
|
|
|
2019 tax benefit due to income
tax rate change |
|
|
(2.8) |
|
|
|
|
Non-GAAP Net Income
and Non-GAAP Diluted EPS Guidance* |
|
$175.3 - $182.9 |
|
|
$2.70 - $2.82 |
(1) Adjustments are pre-tax,
with net tax impact listed separately |
|
|
|
|
|
|
(2) Tax impact is
calculated by multiplying the estimated effective tax rate for the
period of 21.0% |
*Reconciliation of 2020 Non-GAAP Adjusted EBITDA Guidance:
|
|
Fiscal Year 2020 |
|
Net (loss) |
|
($35.9 - $29.6) |
|
Interest expense |
|
71.6 - 73.0 |
|
Tax expense |
|
27.4 - 28.7 |
|
A&S purchase accounting
adjustment |
|
|
(0.8) |
|
|
Depreciation expense |
|
55.6 - 57.8 |
|
Acquisition related
amortization expense |
|
69.4 - 70.2 |
|
Stock based compensation |
|
14.1 - 15.1 |
|
Impairment of goodwill and
intangible asset |
|
|
147.5 |
|
|
Restructuring costs |
|
6.1 - 8.1 |
|
Non-GAAP adjusted
EBITDA* |
|
$355.0 - $370.0 |
|
Conference Call
The Company will conduct an investor conference call to discuss
its unaudited third-quarter 2020 financial results on Friday,
October 23, 2020 at 10:00 a.m. ET. The public is invited to listen
to the conference call by dialing (866) 209-9085 domestically or
(647) 689-5687 for international access and asking to participate
in the ALTRA conference call. A live webcast of the call will be
available in the "Investor Relations" section of
www.altramotion.com. Individuals may download charts that will be
used during the call at www.altramotion.com under Events and
Presentations in the Investor Relations section. The charts will be
available after earnings are released. A replay of the recorded
conference call will be available at the conclusion of the call on
October 23, 2020 through midnight on November 6, 2020. To listen to
the replay, dial (800) 585-8367 domestically or (416) 621-4642 for
international access (Conference ID: 1608127). A webcast replay
also will be available.
About Altra Industrial Motion Corp.
Altra Industrial Motion Corp. is a premier industrial, global
manufacturer and supplier of electromechanical power transmission,
motion control and automation products, including highly engineered
power transmission, motion control and engine braking systems and
components. Altra's portfolio consists of 27 well-respected brands
including Bauer Gear Motor, Boston Gear, Jacobs Vehicle Systems,
Kollmorgen, Portescap, Stromag, Svendborg Brakes, TB Wood's,
Thomson and Warner Electric. Headquartered in Braintree,
Massachusetts, Altra has approximately 9,200 employees and over 50
production facilities in 16 countries around the world.
Altra Industrial Motion
Corp. |
|
Consolidated Balance
Sheets |
|
|
|
|
|
|
|
In millions of dollars |
September 30,
2020 |
|
|
December 31,
2019 |
|
Assets: |
(Unaudited) |
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
238.7 |
|
|
$ |
167.3 |
|
Trade receivables, net |
|
237.0 |
|
|
|
243.2 |
|
Inventories |
|
219.2 |
|
|
|
222.5 |
|
Income tax receivable |
|
13.6 |
|
|
|
5.2 |
|
Prepaid expenses and other current assets |
|
35.4 |
|
|
|
29.1 |
|
Total current assets |
|
743.9 |
|
|
|
667.3 |
|
Property, plant and equipment, net |
|
336.7 |
|
|
|
354.4 |
|
Goodwill |
|
1,563.4 |
|
|
|
1,694.9 |
|
Intangible assets, net |
|
1,451.9 |
|
|
|
1,502.4 |
|
Deferred income taxes |
|
1.0 |
|
|
|
3.0 |
|
Other non-current assets, net |
|
9.2 |
|
|
|
25.1 |
|
Operating lease, right of use asset |
|
39.8 |
|
|
|
36.6 |
|
Total assets |
$ |
4,145.9 |
|
|
$ |
4,283.7 |
|
|
|
|
|
|
|
|
|
Liabilities and stockholders'
equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
Accounts payable |
$ |
139.9 |
|
|
$ |
154.7 |
|
Accrued payroll |
|
63.1 |
|
|
|
58.3 |
|
Accruals and other current liabilities |
|
77.4 |
|
|
|
82.0 |
|
Income tax payable |
|
10.0 |
|
|
|
13.2 |
|
Current portion of long-term debt |
|
16.5 |
|
|
|
18.0 |
|
Operating lease liabilities |
|
12.7 |
|
|
|
13.5 |
|
Total current liabilities |
|
319.6 |
|
|
|
339.7 |
|
Long-term debt, less current portion and net of unaccreted
discount |
|
1,476.9 |
|
|
|
1,563.8 |
|
Deferred income taxes |
|
374.0 |
|
|
|
369.1 |
|
Pension liabilities |
|
31.4 |
|
|
|
30.8 |
|
Long-term taxes payable |
|
2.7 |
|
|
|
4.5 |
|
Other long-term liabilities |
|
16.3 |
|
|
|
28.8 |
|
Operating lease liabilities, net of current portion |
|
29.2 |
|
|
|
24.7 |
|
Total stockholders'
equity |
|
1,895.8 |
|
|
|
1,922.3 |
|
Total liabilities, and
stockholders' equity |
$ |
4,145.9 |
|
|
$ |
4,283.7 |
|
|
|
|
|
|
|
|
|
Reconciliation to operating
working capital: |
|
|
|
|
|
|
|
Trade receivables, net |
$ |
237.0 |
|
|
$ |
243.2 |
|
Inventories |
|
219.2 |
|
|
|
222.5 |
|
Accounts payable |
|
(139.9 |
) |
|
|
(154.7 |
) |
Non-GAAP operating working
capital* |
$ |
316.3 |
|
|
$ |
311.0 |
|
Consolidated
Statements of Income Data: |
Quarter Ended September 30, |
|
|
|
|
Year to Date Ended September 30, |
|
|
|
|
In millions of dollars |
2020 |
|
|
|
|
2019 |
|
|
|
|
2020 |
|
|
|
|
2019 |
|
|
|
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
|
|
|
|
(Unaudited) |
|
|
|
|
Net sales |
$ |
437.8 |
|
|
|
|
$ |
442.9 |
|
|
|
|
$ |
1,272.8 |
|
|
|
|
$ |
1,392.2 |
|
|
|
|
Cost of sales |
|
273.7 |
|
|
|
|
|
285.9 |
|
|
|
|
|
812.3 |
|
|
|
|
|
893.3 |
|
|
|
|
Gross profit |
$ |
164.1 |
|
|
|
|
$ |
157.0 |
|
|
|
|
$ |
460.5 |
|
|
|
|
$ |
498.9 |
|
|
|
|
Gross profit as a percent of net sales |
|
37.5 |
% |
|
|
|
|
35.4 |
% |
|
|
|
|
36.2 |
% |
|
|
|
|
35.8 |
% |
|
|
|
Selling, general &
administrative expenses |
|
82.5 |
|
|
|
|
|
87.9 |
|
|
|
|
|
245.4 |
|
|
|
|
|
270.8 |
|
|
|
|
Impairment of goodwill and
intangible asset |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
147.5 |
|
|
|
|
|
— |
|
|
|
|
Research and development
expenses |
|
13.8 |
|
|
|
|
|
14.4 |
|
|
|
|
|
42.6 |
|
|
|
|
|
44.4 |
|
|
|
|
Restructuring costs |
|
2.4 |
|
|
|
|
|
6.2 |
|
|
|
|
|
5.5 |
|
|
|
|
|
11.7 |
|
|
|
|
(Loss)/Income from operations |
$ |
65.4 |
|
|
|
|
$ |
48.5 |
|
|
|
|
$ |
19.5 |
|
|
|
|
$ |
172.0 |
|
|
|
|
Income from operations as a percent of net sales |
|
14.9 |
% |
|
|
|
|
11.0 |
% |
|
|
|
|
1.5 |
% |
|
|
|
|
12.4 |
% |
|
|
|
Interest expense, net |
|
18.0 |
|
|
|
|
|
18.2 |
|
|
|
|
|
54.2 |
|
|
|
|
|
56.6 |
|
|
|
|
Other non-operating
(income)/expense, net |
|
(0.3 |
) |
|
|
|
|
(0.4 |
) |
|
|
|
|
0.8 |
|
|
|
|
|
1.1 |
|
|
|
|
(Loss)/Income before income
taxes |
$ |
47.7 |
|
|
|
|
$ |
30.7 |
|
|
|
|
$ |
(35.5 |
) |
|
|
|
$ |
114.3 |
|
|
|
|
Provision for income
taxes |
|
9.4 |
|
|
|
|
|
5.0 |
|
|
|
|
|
21.2 |
|
|
|
|
|
24.4 |
|
|
|
|
Income tax rate |
|
19.7 |
% |
|
|
|
|
16.3 |
% |
|
|
|
|
-59.7 |
% |
|
|
|
|
21.3 |
% |
|
|
|
Net (loss)/income |
$ |
38.3 |
|
|
|
|
$ |
25.7 |
|
|
|
|
$ |
(56.7 |
) |
|
|
|
$ |
89.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
64.6 |
|
|
|
|
|
64.4 |
|
|
|
|
|
64.6 |
|
|
|
|
|
64.3 |
|
|
|
|
Diluted |
|
64.9 |
|
|
|
|
|
64.6 |
|
|
|
|
|
64.6 |
|
|
|
|
|
64.5 |
|
|
|
|
Net (loss)/income per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.59 |
|
|
|
|
$ |
0.40 |
|
|
|
|
$ |
(0.88 |
) |
|
|
|
$ |
1.40 |
|
|
|
|
Diluted |
$ |
0.59 |
|
|
|
|
$ |
0.40 |
|
|
|
|
$ |
(0.88 |
) |
|
|
|
$ |
1.39 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Income from Operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Income from operations |
$ |
65.4 |
|
|
|
|
$ |
48.5 |
|
|
|
|
$ |
19.5 |
|
|
|
|
$ |
172.0 |
|
|
|
|
Restructuring costs |
|
2.4 |
|
|
|
|
|
6.2 |
|
|
|
|
|
5.5 |
|
|
|
|
|
11.7 |
|
|
|
|
Acquisition related stock compensation expense |
|
0.4 |
|
|
|
|
|
0.7 |
|
|
|
|
|
1.4 |
|
|
|
|
|
2.6 |
|
|
|
|
Acquisition related amortization expense |
|
17.5 |
|
|
|
|
|
17.5 |
|
|
|
|
|
52.3 |
|
|
|
|
|
52.9 |
|
|
|
|
Impairment of goodwill and intangible asset |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
147.5 |
|
|
|
|
|
— |
|
|
|
|
Acquisition related expenses |
|
— |
|
|
|
|
|
- |
|
|
|
|
|
— |
|
|
|
|
|
0.7 |
|
|
|
|
Non-GAAP income from operations * |
$ |
85.7 |
|
|
|
|
$ |
72.9 |
|
|
|
|
$ |
226.2 |
|
|
|
|
$ |
239.9 |
|
|
|
|
Non-GAAP income from
operations as a percent of net sales |
|
19.6 |
% |
|
|
|
|
16.5 |
% |
|
|
|
|
17.8 |
% |
|
|
|
|
17.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Net (Loss)/Income: |
` |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss)/income |
$ |
38.3 |
|
|
|
|
$ |
25.7 |
|
|
|
|
$ |
(56.7 |
) |
|
|
|
$ |
89.9 |
|
|
|
|
Restructuring costs |
|
2.4 |
|
|
|
|
|
6.2 |
|
|
|
|
|
5.5 |
|
|
|
|
|
11.7 |
|
|
|
|
Acquisition related stock
compensation expense |
|
0.4 |
|
|
|
|
|
0.7 |
|
|
|
|
|
1.4 |
|
|
|
|
|
2.6 |
|
|
|
|
Acquisition related
amortization expense |
|
17.5 |
|
|
|
|
|
17.5 |
|
|
|
|
|
52.3 |
|
|
|
|
|
52.9 |
|
|
|
|
Acquisition related
expenses |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
|
|
|
0.7 |
|
|
|
|
Automation and Specialty
acquisition purchase price adjustment |
|
(0.8 |
) |
|
|
|
|
— |
|
|
|
|
|
(0.8 |
) |
|
|
|
|
— |
|
|
|
|
Non-cash amortization of
interest rate swap expense |
|
3.4 |
|
|
|
|
|
— |
|
|
|
|
|
5.6 |
|
|
|
|
|
— |
|
|
|
|
Impairment of intangible
assets - trademarks |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
8.4 |
|
|
|
|
|
— |
|
|
|
|
Cross currency interest rate
swap settlement fee |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
0.9 |
|
|
|
|
|
— |
|
|
|
|
Tax impact of above
adjustments |
|
(4.7 |
) |
|
|
|
|
(5.8 |
) |
|
|
|
|
(15.6 |
) |
|
|
|
|
(16.2 |
) |
|
|
|
2019 tax benefit due to income
tax rate change |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
(2.8 |
) |
|
|
|
|
— |
|
|
|
|
Impairment of intangible
assets - goodwill |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
139.1 |
|
|
|
|
|
— |
|
|
|
|
Non-GAAP net income * |
$ |
56.5 |
|
|
|
|
$ |
44.3 |
|
|
|
|
$ |
137.3 |
|
|
|
|
$ |
141.6 |
|
|
|
|
Non-GAAP diluted earnings per
share * |
$ |
0.87 |
|
|
(1 |
) |
$ |
0.69 |
|
|
(2 |
) |
$ |
2.12 |
|
|
(3 |
) |
$ |
2.20 |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Tax impact is
calculated by multiplying the estimated effective tax rate for the
period of 20.4% by the above items. |
|
(2) Tax impact is
calculated by multiplying the estimated effective tax rate for the
period of 23.8% by the above items. |
|
(3) Tax impact is
calculated by multiplying the estimated effective tax rate for the
period of 21.3% by the above items. |
|
(4) Tax impact is
calculated by multiplying the estimated effective tax rate for the
period of 23.8% by the above items. |
|
Cash flows from operating
activities |
|
Year to Date Ended September 30, |
|
In millions of dollars |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Net (loss)/income |
|
$ |
(56.7 |
) |
|
$ |
89.9 |
|
Adjustments to reconcile net
income to net operating cash flows: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
44.2 |
|
|
|
43.5 |
|
Amortization of intangible assets |
|
|
52.3 |
|
|
|
52.9 |
|
Amortization of deferred financing costs |
|
|
3.4 |
|
|
|
3.8 |
|
Accretion of debt discount |
|
|
0.4 |
|
|
|
— |
|
Non-cash amortization of interest rate swap expense |
|
|
5.6 |
|
|
|
— |
|
Impairment of goodwill and intangible asset |
|
|
147.5 |
|
|
|
— |
|
Payment for interest rate swap settlement |
|
|
(34.7 |
) |
|
|
— |
|
(Gain)/Loss on foreign currency, net |
|
|
(1.2 |
) |
|
|
(0.5 |
) |
Loss on disposal, impairment and other |
|
|
— |
|
|
|
0.2 |
|
Stock-based compensation |
|
|
10.3 |
|
|
|
10.1 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
|
7.9 |
|
|
|
10.2 |
|
Inventories |
|
|
4.3 |
|
|
|
(3.7 |
) |
Accounts payable, accrued payroll, accruals and current
liabilities |
|
|
(2.7 |
) |
|
|
(15.3 |
) |
Other current assets and liabilities |
|
|
(23.2 |
) |
|
|
(10.3 |
) |
Other operating assets and liabilities |
|
|
4.4 |
|
|
|
(0.4 |
) |
Net cash provided by operating activities |
|
|
161.8 |
|
|
|
180.4 |
|
Cash flows from investing
activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment |
|
|
(24.3 |
) |
|
|
(36.9 |
) |
A&S acquisition purchase
price adjustment |
|
|
(1.9 |
) |
|
|
(13.5 |
) |
Proceeds from sale of
building |
|
|
— |
|
|
|
0.4 |
|
Proceeds from cross currency
interest rate swap settlement |
|
|
56.2 |
|
|
|
— |
|
Net cash provided by (used in) investing activities |
|
|
30.0 |
|
|
|
(50.0 |
) |
Cash flows from financing
activities |
|
|
|
|
|
|
|
|
Borrowing under Revolving Credit
Facility |
|
|
100.0 |
|
|
|
— |
|
Payments on Revolving Credit
Facility |
|
|
(100.0 |
) |
|
|
— |
|
Payments on Term Loan
Facility |
|
|
(90.0 |
) |
|
|
(90.0 |
) |
Dividend payments |
|
|
(24.9 |
) |
|
|
(33.1 |
) |
Net payments on financing leases,
mortgages, and other obligations |
|
|
(0.3 |
) |
|
|
(0.9 |
) |
Net proceeds/(payments) from
China debt |
|
|
(1.1 |
) |
|
|
2.1 |
|
Shares surrendered for tax
withholding |
|
|
(3.9 |
) |
|
|
(3.9 |
) |
Net cash used in financing activities |
|
|
(120.2 |
) |
|
|
(125.8 |
) |
Effect of exchange rate changes
on cash and cash equivalents |
|
|
(0.2 |
) |
|
|
(5.6 |
) |
Net change in cash and cash
equivalents |
|
|
71.4 |
|
|
|
(1.0 |
) |
Cash and cash equivalents at beginning of period |
|
|
167.3 |
|
|
|
169.0 |
|
Cash and cash equivalents at end
of period |
|
$ |
238.7 |
|
|
$ |
168.0 |
|
|
|
|
|
|
|
|
|
|
Reconciliation to Free Cash
Flow: |
|
|
|
|
|
|
|
|
Net cash flows from operating
activities |
|
$ |
161.8 |
|
|
$ |
180.4 |
|
Purchase of property, plant and
equipment |
|
|
(24.3 |
) |
|
|
(36.9 |
) |
Free Cash Flow * |
|
|
137.5 |
|
|
|
143.5 |
|
Payment for interest rate swap
settlement |
|
|
34.7 |
|
|
|
— |
|
Adjusted Free Cash Flow * |
|
$ |
172.2 |
|
|
$ |
143.5 |
|
Selected Segment
Data |
|
Quarter Ended September 30, |
|
|
Year to Date Ended September 30, |
|
In millions of dollars |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net
sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Transmission
Technologies |
|
$ |
197.7 |
|
|
$ |
218.7 |
|
|
$ |
610.7 |
|
|
$ |
688.6 |
|
Automation & Specialty |
|
|
240.8 |
|
|
|
224.8 |
|
|
|
665.2 |
|
|
|
707.2 |
|
Inter-segment eliminations |
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
|
(3.1 |
) |
|
|
(3.6 |
) |
Total |
|
$ |
437.8 |
|
|
$ |
442.9 |
|
|
$ |
1,272.8 |
|
|
$ |
1,392.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Income from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Power Transmission
Technologies |
|
$ |
23.5 |
|
|
$ |
26.3 |
|
|
$ |
73.0 |
|
|
$ |
87.1 |
|
Automation & Specialty |
|
|
44.6 |
|
|
|
29.7 |
|
|
|
(48.0 |
) |
|
|
102.1 |
|
Corporate |
|
|
(0.3 |
) |
|
|
(1.3 |
) |
|
|
- |
|
|
|
(5.5 |
) |
Restructuring costs |
|
|
(2.4 |
) |
|
|
(6.2 |
) |
|
|
(5.5 |
) |
|
|
(11.7 |
) |
Total |
|
$ |
65.4 |
|
|
$ |
48.5 |
|
|
$ |
19.5 |
|
|
$ |
172.0 |
|
*Reconciliation of Non-GAAP Income from Operations by
Segment:
Selected Segment
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions of dollars |
|
Quarter Ended September 30, 2020 |
|
|
Year to Date Ended September 30, 2020 |
|
|
|
Power Transmission Technologies |
|
|
Automation and Specialty |
|
|
Corporate |
|
|
Total |
|
|
Power Transmission Technologies |
|
|
Automation and Specialty |
|
|
Corporate |
|
|
Total |
|
Income/(loss) from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from operations |
|
$ |
21.3 |
|
|
$ |
44.4 |
|
|
$ |
(0.3 |
) |
|
$ |
65.4 |
|
|
$ |
69.9 |
|
|
$ |
(50.4 |
) |
|
$ |
— |
|
|
$ |
19.5 |
|
Restructuring costs |
|
|
2.2 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
2.4 |
|
|
|
3.1 |
|
|
|
2.4 |
|
|
|
— |
|
|
|
5.5 |
|
Acquisition related stock compensation expense |
|
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
|
1.4 |
|
|
|
1.4 |
|
Impairment of goodwill and intangible asset |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
147.5 |
|
|
|
— |
|
|
|
147.5 |
|
Acquisition related amortization expense |
|
|
2.1 |
|
|
|
15.4 |
|
|
|
— |
|
|
|
17.5 |
|
|
|
6.6 |
|
|
|
45.7 |
|
|
|
— |
|
|
|
52.3 |
|
Total Non-GAAP
Income/(loss) from operations |
|
$ |
25.6 |
|
|
$ |
60.0 |
|
|
$ |
0.1 |
|
|
$ |
85.7 |
|
|
$ |
79.6 |
|
|
$ |
145.2 |
|
|
$ |
1.4 |
|
|
$ |
226.2 |
|
Non-GAAP Income from operations
as a percentage of Segment net sales* |
|
|
12.9 |
% |
|
|
24.9 |
% |
|
|
|
|
|
|
19.6 |
% |
|
|
13.0 |
% |
|
|
21.8 |
% |
|
|
|
|
|
|
17.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Segment
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In millions of dollars |
|
Quarter Ended September 30, 2019 |
|
|
Year to Date Ended September 30, 2019 |
|
|
|
Power Transmission Technologies |
|
|
Automation and Specialty |
|
|
Corporate |
|
|
Total |
|
|
Power Transmission Technologies |
|
|
Automation and Specialty |
|
|
Corporate |
|
|
Total |
|
Income/(loss) from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income/(loss) from operations |
|
$ |
23.4 |
|
|
$ |
26.4 |
|
|
$ |
(1.3 |
) |
|
$ |
48.5 |
|
|
$ |
81.3 |
|
|
$ |
96.2 |
|
|
$ |
(5.5 |
) |
|
$ |
172.0 |
|
Restructuring costs |
|
|
2.9 |
|
|
|
3.3 |
|
|
|
— |
|
|
|
6.2 |
|
|
|
5.8 |
|
|
|
5.9 |
|
|
|
— |
|
|
|
11.7 |
|
Acquisition related stock compensation expense |
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
2.6 |
|
|
|
2.6 |
|
Impairment of goodwill and intangible asset |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6.9 |
|
|
|
46.0 |
|
|
|
— |
|
|
|
52.9 |
|
Acquisition related amortization expense |
|
|
2.3 |
|
|
|
15.2 |
|
|
|
— |
|
|
|
17.5 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Acquisition related expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
|
|
0.7 |
|
Total Non-GAAP
Income/(loss) from operations |
|
$ |
28.6 |
|
|
$ |
44.9 |
|
|
$ |
(0.6 |
) |
|
$ |
72.9 |
|
|
$ |
94.0 |
|
|
$ |
148.1 |
|
|
$ |
(2.2 |
) |
|
$ |
239.9 |
|
Non-GAAP Income from operations
as a percentage of Segment net sales* |
|
|
13.1 |
% |
|
|
20.0 |
% |
|
|
|
|
|
|
16.5 |
% |
|
|
13.7 |
% |
|
|
20.9 |
% |
|
|
|
|
|
|
17.2 |
% |
* Discussion of Non-GAAP Financial Measures
The non-GAAP financial measures used in this release are
utilized by management in comparing our operating performance on a
consistent basis. We believe that these financial measures are
appropriate to enhance the overall understanding of our underlying
operating performance trends compared to historical and prospective
periods and our peers. We believe that these measures provide
important supplemental information to management and investors
regarding financial and business trends relating to the Company's
financial condition and results of operations as well as insight
into the compliance with our debt covenants. Non-GAAP financial
measures should not be considered in isolation from, or as a
substitute for, financial information calculated in accordance with
GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP
financial measures. A reconciliation of non-GAAP financial measures
presented above to our GAAP results has been provided in the
financial tables included in this press release.
Organic Sales
Organic sales in this release excludes the impact of foreign
currency translation.
Non-GAAP Net Income, Non-GAAP Income From Operations, Non-GAAP
Diluted Earnings Per Share, Non-GAAP Operating Income Margin, and
Non-GAAP Diluted EPS Guidance
Non-GAAP Net Income, Non-GAAP Income From Operations, Non-GAAP
Diluted Earnings Per Share, and Non-GAAP Diluted Earnings Per Share
Guidance exclude acquisition related amortization expense,
acquisition related expense, acquisition related stock compensation
expense, restructuring and consolidation costs, non-cash
amortization of interest rate swap expense and other income or
charges that management does not consider to be directly related to
the Company’s core operating performance. Non-GAAP Diluted Earnings
Per Share is calculated by dividing Non-GAAP Net Income by GAAP
weighted average shares outstanding (diluted). Non-GAAP Operating
Income Margin is calculated by dividing Non-GAAP Income From
Operations by GAAP Net Sales.
Non-GAAP Adjusted EBITDA
Adjusted EBITDA represents earnings before interest, taxes,
depreciation, acquisition related amortization, acquisition related
costs, restructuring costs, stock-based compensation, asset
impairment and other income or charges that management does not
consider to be directly related to the Company’s core operating
performance.
Non-GAAP Adjusted EBITDA Margin
Non-GAAP Adjusted EBITDA margin is calculated by dividing
Non-GAAP Adjusted EBITDA by GAAP Net Sales.
Non-GAAP Free Cash Flow
Non-GAAP Free Cash Flow is calculated by deducting purchases of
property, plant and equipment from net cash flows from operating
activities.
Non-GAAP Adjusted Free Cash Flow
Non-GAAP Adjusted Free Cash Flow is calculated by adding back
the payment for the interest rate swap settlement to Non-GAAP Free
Cash Flow.
Non-GAAP Operating Working Capital
Non-GAAP Operating Working Capital is calculated by deducting
accounts payable from net trade receivables plus inventories.
Net Debt
Net Debt is calculated by subtracting cash from total debt.
Forward-Looking Statements
All statements, other than statements of historical fact
included in this release are forward-looking statements, as that
term is defined in the Private Securities Litigation Reform Act of
1995. These statements include, but are not limited to, any
statement that may predict, forecast, indicate or imply future
results, performance, achievements or events. Forward-looking
statements can generally be identified by phrases such as
“believes,” “expects,” “potential,” “continues,” “may,” “should,”
“seeks,” “predicts,” “anticipates,” “intends,” “projects,”
“estimates,” “plans,” “could,” “designed”, “should be,” and other
similar expressions that denote expectations of future or
conditional events rather than statements of fact. Forward-looking
statements also may relate to strategies, plans and objectives for,
and potential results of, future operations, financial results,
financial condition, business prospects, growth strategy and
liquidity, and are based upon financial data, market assumptions
and management's current business plans and beliefs or current
estimates of future results or trends available only as of the time
the statements are made, which may become out of date or
incomplete. Forward looking statements are inherently uncertain,
and investors must recognize that events could differ significantly
from our expectations. These statements include, but may not be
limited to, the statements under “Business Outlook,” and statements
regarding (a) strategic plans to drive organic growth across the
Company’s end markets, (b) capitalizing on the Company’s
cash-generative business model, (c) the pipeline of opportunities
from cross-selling activities, (d) the Company’s future and growth
opportunities when the global economy recovers, and (e) the
Company’s belief in its ability to thrive as a premier industrial
company.
In addition to the risks and uncertainties noted in this
release, there are certain factors that could cause actual results
to differ materially from those anticipated by some of the
statements made. These include: (1) competitive pressures, (2)
changes in political and economic conditions in the United States
and abroad and the cyclical nature of our markets, (3) loss of
distributors, (4) the ability to develop new products and respond
to customer needs, (5) risks associated with international
operations, including currency risks, and the effects of tariffs
and other trade actions taken by the United States and other
countries (6) accuracy of estimated forecasts of OEM customers and
the impact of the current global economic environment on our
customers, (7) risks associated with a disruption to our supply
chain, (8) fluctuations in the costs of raw materials used in our
products, (9) product liability claims, (10) work stoppages and
other labor issues, (11) changes in employment, environmental, tax
and other laws and changes in the enforcement of laws, (12) loss of
key management and other personnel, (13) risks associated with
compliance with environmental laws, (14) the ability to
successfully execute, manage and integrate key acquisitions and
mergers, (15) failure to obtain or protect intellectual property
rights, (16) risks associated with impairment of goodwill or
intangible assets, (17) failure of operating equipment or
information technology infrastructure, including cyber-attacks or
other security breaches, and failure to comply with data privacy
laws or regulations, (18) risks associated with our debt leverage,
(19) risks associated with restrictions contained in the agreements
governing Altra’s $400 million aggregate principal amount of 6.125%
senior notes due 2026 and Altra’s revolving credit facility and
term loan facility, (20) risks associated with compliance with tax
laws, (21) risks associated with the global recession and
volatility and disruption in the global financial markets, (22)
risks associated with implementation of our enterprise resource
planning system, (23) risks associated with the Svendborg, Stromag,
and A&S acquisitions and integration and other acquisitions,
(24) risks associated with certain minimum purchase agreements we
have with suppliers, (25) risks related to our relationships with
strategic partners, (26) our ability to offset increased commodity
and labor costs with increased prices, (27) risks associated with
our exposure to variable interest rates and foreign currency
exchange rates, (28) risks associated with interest rate swap
contracts, (29) risks associated with our exposure to renewable
energy markets, (30) risks related to regulations regarding
conflict minerals, (31) risks related to restructuring and plant
consolidations, (32) risks related to our acquisition of A&S,
including (a) the possibility that we may be unable to achieve
expected synergies and operating efficiencies in connection with
the transaction within the expected time-frames or at all and to
successfully integrate A&S, (b) expected or targeted future
financial and operating performance and results, (c) operating
costs, customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers, clients or suppliers) being greater than
expected following the transaction, (d) our ability to retain key
executives and employees, (e) slowdowns or downturns in economic
conditions generally and in the markets in which the A&S
businesses participate specifically, (f) lower than expected
investments and capital expenditures in equipment that utilizes
components produced by us or A&S, (g) lower than expected
demand for our or A&S’s repair and replacement businesses, (h)
our ability to successfully integrate the merged assets and the
associated technology and achieve operational efficiencies, (i) the
integration of A&S being more difficult, time-consuming or
costly than expected, (j) the inability to undertake certain
corporate actions that otherwise could be advantageous to comply
with certain tax covenants, (k) potential unknown liabilities and
unforeseen expenses related to the acquisition and (l) the impact
on our internal controls and compliance with the regulatory
requirements under the Sarbanes-Oxley Act of 2002, (33) the risk
associated with the UK’s departure from the European Union, (34)
Altra’s ability to achieve the efficiencies, savings and other
benefits anticipated from its cost reduction, margin improvement,
restructuring, plant consolidation and other business optimization
initiatives, (35) the risks associated with transitioning from
LIBOR to a replacement alternative reference rate, (36) the scope
and duration of the COVID-19 global pandemic and its impact on
global economic systems and our employees, sites, operations,
customers and supply chain, and (37) other risks, uncertainties and
other factors described in the Company's quarterly reports on Form
10-Q and annual reports on Form 10-K and in the Company's other
filings with the U.S. Securities and Exchange Commission (SEC) or
in materials incorporated therein by reference. Except as required
by applicable law, Altra does not intend to update or alter its
forward-looking statements, whether as a result of new information,
future events or otherwise.
AIMC-E
CONTACT:
Altra Industrial Motion Corp.
Christian Storch, Chief Financial Officer
781-917-0541
christian.storch@altramotion.com
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