- Revenue for the year increased $58.6
million, or 23%, driven primarily by 15% organic growth
- 2018 net income nearly doubled to a
record $15.9 million; Diluted earnings per share increased $0.83 to
$1.70
- Fourth quarter revenue grew 13% to
$73.9 million; Organic growth was 5% excluding FX
- Backlog grew 14% sequentially to a
record level of $132.0 million
- Enhanced market and technology
capabilities with TCI, LLC acquisition
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 fourth quarter and full
year ended December 31, 2018. Results include the acquisition of
Maval Industries (“Maval) in January 2018 and a partial month of
operations of the TCI, LLC (“TCI”) acquisition that was completed
December 6, 2018.
“The success of our One Allied approach to drive organic sales
was evident during the year as we achieved double-digit organic
growth. This, combined with the successful execution of our
acquisition strategy, resulted in record annual revenue and net
income,” commented Dick Warzala, Chairman and CEO. “We are winning
new projects and customers and gaining market share in many of our
served markets. We believe that the successful execution of our
strategic plan, our prudent use of capital and the consistent
application and utilization of our Allied Systematic Tools (AST)
kit to drive continuous improvements, has enabled our success.
Moving forward, we plan to continue this same approach to managing
our business and to drive our results in the future.”
Mr. Warzala added, “Fourth quarter results, while solid, were
impacted in December by a couple of our markets that slowed or
shifted order timing to manage inventory levels around year-end.
That said, we believe the corrections were completed and our
business will return to levels we experienced earlier in 2018.
“We have been particularly pleased with our recent acquisition
of TCI as it further broadened our offerings and strengthened our
position as a global leader of application-focused controlled
motion solutions. The integration is on track and we believe there
is excellent long-term growth opportunity as we leverage the
technology, expanded channels and extended footprint of the
combined businesses.”
Fourth Quarter 2018 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue of $74.0 million was up $8.6 million, or 13%. Organic
growth was approximately 5%, excluding the $1.2 million unfavorable
impact of changes in foreign currency exchange (“FX”). Sales to
U.S. customers were 52% of total sales for the quarter compared
with 49% for the fourth quarter last year, with the balance of
sales to customers primarily in Europe, Canada and Asia.
Gross margin decreased 220 basis points to 29.2% driven
primarily by product mix across the organization. Incremental gross
profit from TCI partially offset the impact of the expected lower
margin profile of Maval.
Operating costs and expenses outpaced the rate of revenue growth
in the quarter. These costs included additional engineering
personnel to support the Company’s growth, $413 thousand of
business development expense and incremental intangible asset
amortization of $140 thousand related to the acquisition. As a
result, operating income decreased $1.8 million, or 35%, and
operating margin contracted to 4.5%.
Net income was $2.6 million, or $0.28 per diluted share,
compared with $95 thousand, or $0.01 per diluted share. The
prior-year period was negatively impacted by the transition tax on
the deemed repatriation of foreign earnings resulting from the U.S.
Tax Cuts and Jobs Act (“the Tax Act”).
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense and business development costs
(“Adjusted EBITDA”) was $7.8 million, or 10.5% of sales, in the
2018 fourth quarter. 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.
Full Year 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 $310.6 million, up $58.6 million, or 23%. Organic
growth was up 15% in 2018. Sales to U.S. customers were 53% of
total sales, consistent with 2017, with the balance of sales to
customers primarily in Europe, Canada and Asia. The impact of FX
fluctuations had a favorable $4.3 million impact on 2018
revenue.
Gross profit increased 21% to $91.4 million, though gross margin
contracted 60 basis points to 29.4%, reflecting the expected lower
margin profile of Maval.
Operating costs and expenses were up $11.3 million to $68.2
million; however, as a percentage of revenue, operating expenses
were down 70 basis points to 21.9%. General and administrative
expense as a percent of revenue increased 40 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 $19.9 million, up 13.5%. As a
percentage of revenue, E&D decreased 60 basis points to
6.4%.
Operating income was up 23.5%, or $4.4 million, to $23.2
million. Higher operating leverage offset the gross margin pressure
and $762 thousand of business development expenses resulting in
operating margin of 7.5%, unchanged from 2017.
Interest expense increased $227 thousand to $2.7 million as the
Company took on additional debt to fund acquisitions.
The effective tax rate for the year was down to 23.0% compared
with 50.2%, due primarily to the Tax Act. The higher rate in the
prior-year period also included a transition tax on the deemed
repatriation of foreign earnings. Net income nearly doubled to
$15.9 million, or $1.70 per diluted share, in 2018. The Company
anticipates its effective tax rate for 2019 to range from 25% to
28%.
Adjusted EBITDA was $38.4 million, up $7.2 million, or 23%. As a
percent of sales, Adjusted EBITDA was 12.4%, up 10 basis points.
See the attached table for a description of non-GAAP financial
measures and reconciliation table for Adjusted EBITDA.
Balance Sheet and Cash Flow Review
Allied Motion acquired TCI on December 6, 2018 for $64.1
million. The acquisition was funded with existing cash plus
borrowings under the Company’s revolving credit facility. Cash and
cash equivalents were $8.7 million compared with $15.6 million at
the end of 2017. Total debt was $122.5 million at the end of 2018,
up $69.4 million from year-end 2017 largely due to acquisitions.
Debt, net of cash, was $113.8 million, or 52.8% of net debt to
capitalization, up from 30.1% at the end of 2017.
Capital expenditures were $14.3 million and included investments
for productivity improvement and growth initiatives. The Company
expects to invest $15 million to $18 million in capital
expenditures during fiscal 2019, which reflects additional support
for the significant project wins that will begin ramping by
year-end, the next generation of off-road capabilities and
incremental investments for TCI.
Orders and Backlog Summary ($ in
thousands)
Q4 2018
Q3 2018 Q2
2018 Q1 2018
Q4 2017 Orders $ 84,911 $ 85,081 $
86,238 $ 80,699 $ 72,764 Backlog $ 131,997 $ 115,713 $ 111,170 $
107,321 $ 100,708
The year-over-year increase in orders and backlog reflect recent
acquisitions and strength across all the Company’s served markets.
The impact on orders from FX fluctuations for the fourth quarter
was unfavorable $1.1 million year-over-year.
Backlog was up 31% over the prior-year period and increased 14%
since the sequential third quarter of 2018. Included in backlog was
$5.6 million attributable to the acquisition of TCI, which is more
of a book-to-bill type business. 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,
March 14, 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, March 21, 2019. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13686222 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 March
14, 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.CONSOLIDATED STATEMENTS OF INCOME(In thousands,
except per share data)(Unaudited)
For the three months ended
For the year ended December 31, December 31,
2018 2017 2018 2017
Revenue $ 73,962 $ 65,355 $ 310,611 $ 252,012 Cost of goods sold
52,392 44,804 219,208
176,333 Gross profit 21,570 20,551 91,403 75,679
Operating costs and expenses: Selling 3,405 2,844 11,807 10,979
General and administrative 8,068 6,941 32,037 24,926 Engineering
and development 5,303 4,558 19,913 17,542 Business development 413
213 762 213 Amortization of intangible assets 1,021
814 3,655 3,219 Total
operating costs and expenses 18,210 15,370
68,174 56,879 Operating income
3,360 5,181 23,229 18,800 Other expense (income): Interest expense
862 677 2,701 2,474 Other (income) expense, net (35 )
55 (153 ) 190 Total other expense, net
827 732 2,548
2,664 Income before income taxes 2,533 4,449 20,681 16,136
Provision for income taxes 103 (4,354 )
(4,756 ) (8,100 ) Net income $ 2,636 $ 95 $
15,925 $ 8,036 Basic earnings per share:
Earnings per share $ 0.28 $ 0.01 $ 1.72 $ 0.88
Basic weighted average common shares 9,306 9,198 9,265 9,153
Diluted earnings per share: Earnings per share $ 0.28 $ 0.01
$ 1.70 $ 0.87 Diluted weighted average common
shares 9,383 9,303 9,370 9,275 Net Income $ 2,636 $ 95 $ 15,925 $ 8
036 Foreign currency translation adjustment (957 ) 706 (3,109 )
6,314 Change in accumulated income (loss) on derivatives (1) (750 )
404 238 226 Pension adjustments (2) (61 ) 123
(61 ) (123 ) Comprehensive income $ 868 $
1,082 $ 12,993 $ 14,453
(1) Net of tax of $132 for the period ended December
31, 2018 (2) Net of tax of $2 and ($21) for the periods ended
December 31, 2018 and 2017
ALLIED MOTION TECHNOLOGIES
INC.CONSOLIDATED BALANCE SHEETS(In thousands, except
per share data)
December 31,2018
December 31,2017
Assets Current assets: Cash and cash equivalents $ 8,673 $
15,590 Trade receivables, net of allowance for doubtful accounts of
$530 and $341 at December 31, 2018 and December 31, 2017,
respectively 43,247 31,822 Inventories 54,971 32,568 Prepaid
expenses and other assets 4,003 3,460 Total
current assets 110,894 83,440 Property, plant and equipment, net
48,035 38,403 Deferred income taxes 341 14 Intangible assets, net
68,354 32,073 Goodwill 52,639 29,531 Other long term assets 5,038
4,461
Total Assets
$ 285,301 $ 187,922
Liabilities and Stockholders’
Equity Current liabilities: Debt obligations - 461 Accounts
payable 25,867 15,351 Accrued liabilities 18,722
14,270 Total current liabilities 44,589 30,082 Long-term
debt 122,516 52,694 Deferred income taxes 3,860 3,609 Pension and
post-retirement obligations 4,293 4,667 Other long term liabilities
8,230 9,523 Total liabilities 183,488 100,575
Stockholders’ Equity: Common stock, no par value, authorized 50,000
shares; 9,485 and
9,427 shares issued and outstanding at
December 31, 2018 andDecember 31, 2017, respectively
33,613 31,051 Preferred stock, par value $1.00 per share,
authorized 5,000 shares; no shares issued or outstanding - -
Retained earnings 76,718 61,882 Accumulated other comprehensive
loss (8,518 ) (5,586 ) Total stockholders’ equity 101,813
87,347 Total Liabilities and Stockholders’
Equity $ 285,301 $ 187,922
ALLIED MOTION TECHNOLOGIES
INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)
For the year ended December
31,
2018 2017 Cash Flows From Operating
Activities: Net income $ 15,925 $ 8,036 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 11,576 10,274 Deferred income taxes
(76 ) 3,713 Loss on sale of assets 19 - Provision for doubtful
accounts 192 39 Provision for excess and obsolete inventory 682 480
Provision for warranty (13 ) 234 Debt issue cost amortization
recorded in interest expense 148 165 Restricted stock compensation
2,643 2,026 Other 57 (756 ) Changes in operating assets and
liabilities, net of acquisitions: Increase in trade receivables
(4,110 ) (4,051 ) (Increase) decrease in inventories (17,327 ) 18
Increase in prepaid expenses and other assets (835 ) (328 )
Increase in accounts payable 6,533 1,277 Increase in accrued
liabilities and other liabilities 2,038 4,280
Net cash provided by operating activities 17,452 25,407
Cash Flows From Investing Activities: Purchase of
property, plant and equipment (14,333 ) (6,201 ) Consideration paid
for acquisitions, net of cash acquired (77,413 ) -
Net cash used in investing activities (91,746 ) (6,201 )
Cash Flows From Financing Activities: (Repayments) on
lines-of-credit (454 ) (518 ) Principal payments of long-term debt
(13,278 ) (18,389 ) Proceeds from issuance of long-term debt 83,163
- Payment of debt issuance costs (72 ) - Issuance of restricted
stock 1,076 - Dividends paid to stockholders (1,079 ) (959 )
Tax withholdings related to settlements of
restricted stock
(1,579 ) (1,513 ) Stock transactions under employee benefit stock
plans - 1,213 Net cash provided by
(used in) financing activities 67,777 (20,166 ) Effect of foreign
exchange rate changes on cash (400 ) 1,067 Net
(decrease) increase in cash and cash equivalents (6,917 ) 107 Cash
and cash equivalents at beginning of period 15,590
15,483 Cash and cash equivalents at end of period
8,673 15,590
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial
Measures
(In thousands)
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
twelve months ended December 31, 2018 and 2017 is as follows:
Three Months Ended December 31,
2018 2017
Net income $ 2,636 $ 95 Interest expense 862 677 Provision
for income tax (103 ) 4,354 Depreciation and amortization
3,122 2,684
EBITDA
6,517 7,810 Stock compensation expense 855 553
Business development costs 413
213
Adjusted EBITDA
$ 7,784 $ 8,576
Year ended December 31,
2018 2017 Net income $ 15,925 $
8,036 Interest expense 2,701 2,474 Provision for income tax 4,756
8,100 Depreciation and amortization
11,576 10,274
EBITDA 34,958
28,884 Stock compensation expense 2,643 2,026 Business
development costs 762
213
Adjusted EBITDA $
38,363 $ 31,123
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190313005846/en/
Company:Sue ChiarmonteAllied Motion Technologies
Inc.Phone: 716-242-8634 x602Email:
sue.chiarmonte@alliedmotion.comInvestors:Deborah K.
PawlowskiKei Advisors LLCPhone: 716-843-3908Email:
dpawlowski@keiadvisors.com
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Allied Motion Technologies (NASDAQ:AMOT)
Historical Stock Chart
From Sep 2023 to Sep 2024