- For the Quarter, revenue grew 19% to $87.9 million and net
income grew 32% to $3.5 million
- For the Quarter, achieved gross margin of 30.1%, a 90 basis
point improvement driven by lean manufacturing improvements,
enhanced mix and higher volume, while strong operating leverage
drove a 200 basis point expansion in operating margin.
- For the Year, revenue grew 19% to a record level of $371.1
million, supported by 9% organic growth, and margin expansion
delivered record net income of $17.0 million, or $1.80 per diluted
share.
- For the Year cash generated from operations nearly doubled to
$34.5 million
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 fourth quarter and
full year ended December 31, 2019. Results include the TCI, LLC
(“TCI”) acquisition that was completed December 6, 2018.
“We delivered an excellent year in 2019 as our focused
investments and One Allied approach continued to drive solid
organic growth with measurable share gains in many of our served
markets. The advancement of our sales team and our strategy to
focus on diversification into targeted verticals has been
instrumental in our success. Concurrently, we have enhanced our
margin profile by furthering our Allied Systematic Tools throughout
the organization, focusing on continuous improvement and realizing
the full-year benefit of TCI,” commented Dick Warzala, Chairman and
CEO.
He added, “While there are some headwinds to contend with, such
as softness in Europe, we believe that solid execution of our
strategy, including a healthy pipeline of organic and acquisition
opportunities, enables us to more than offset the challenges and
supports our confidence moving forward into 2020.”
He concluded, “Our most recent acquisition, Dynamic Controls
Group, is further testament to our strategy of expanding our
electronics and software capabilities to create unique, solutions
for our markets. With Dynamic, we have furthered our position in
the medical market and we will leverage the talent and know-how of
the Dynamic team across other targeted market verticals as
well.”
Fourth Quarter 2019 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue of $87.9 million was up $14.0 million, or 19%, and
reflects double-digit growth in Aerospace & Defense and
Vehicle, and contributions from TCI. Excluding foreign currency
translation, which had a $1.1 million unfavorable impact on
revenue, revenue grew 20%. Organic revenue grew 10%, driven by new
customers and applications, as well as strong macroeconomic drivers
in the U.S. Sales to U.S. customers were 58% of total sales for the
quarter compared with 52% from the fourth quarter last year, with
the balance of sales to customers primarily in Europe, Canada and
Asia. Revenue excluding the effect of foreign currency translation
is a non-GAAP measure. The Company believes this measure is useful
for 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 translation.
Gross margin expanded 90 basis points to 30.1%, in large part
due to productivity, higher volume and improved mix across a number
of served markets, including the favorable impact of TCI.
Operating costs and expenses as a percent of revenue were down
100 basis points to 23.6%, as past investments in the Company’s
infrastructure are now leveraged on higher volume. General and
administrative expenses declined 40 basis points to 10.5% of
revenue, while engineering and development expense decreased 50
basis points to 6.7%. As a result, operating income increased 70%
to $5.7 million and operating margin expanded 200 basis points to
6.5%.
Fourth quarter net income increased to $3.5 million, or $0.37
per diluted share, compared with $2.6 million, or $0.28 per diluted
share. The 2019 fourth quarter effective tax rate was 16.7%
reflecting additional R&D tax credits.
Earnings before interest, taxes, depreciation, amortization,
stock compensation expense, business development costs and
non-income based tax assessment (“Adjusted EBITDA”) was $10.0
million, up $2.2 million or 29%. As a percent of sales, Adjusted
EBITDA was 11.4%, up 90 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.
Full Year 2019 Results (Narrative compares with
prior-year period unless otherwise noted)
Strong demand in the Aerospace & Defense and Medical
markets, along with the incremental TCI business, resulted in
record revenue of $371.1 million, up $60.5 million, or 19%. The
impact of FX fluctuations was unfavorable $7.8 million for the full
year 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 $112.6 million and gross margin
was up 90 basis points to 30.3%, largely due to higher volume and
favorable mix, including TCI.
Operating costs and expenses as a percent of revenue were 22.4%,
up 50 basis points. However, operating margin increased 40 basis
points to 7.9%.
The effective tax rate for the year increased 560 basis points
to 28.6%, and reflects a $433 thousand increase in the income tax
provision in the third quarter of 2019 related to tax assessments
in a foreign jurisdiction for a previous acquisition. Additionally,
the 2018 effective tax rate benefited from the impact of the Tax
Cuts and Jobs Act of 2017. The Company expects its effective tax
rate for 2020 to range from 27% to 29%.
Net income increased 7% to a record $17.0 million, or $1.80 per
diluted share, in 2019. Excluding atypical tax items and business
development costs, adjusted net income for the full year 2019 was
$17.9 million, up 10%, or $1.89 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.
Full year Adjusted EBITDA was up 24% to $47.5 million and as a
percent of sales was 12.8%, up 40 basis points. See the attached
table for a description of non-GAAP financial measures and
reconciliation table for Adjusted Net Income.
Balance Sheet and Cash Flow Review
Cash provided by operations was $34.5 million, an increase of
$17.1 million, or 98%. Cash generated was used to reduce debt and
fund expansion initiatives to support new customers. Capital
expenditures for the year were $14.9 million. Cash and cash
equivalents at year end were $13.4 million compared with $8.7
million at the end of 2018.
The Company expects 2020 capital expenditures to be
approximately $15 million to $18 million. Primarily expansion
capital, investments will be for new customer projects, completion
of the large, previously-announced Vehicle market project wins and
next-generation off-road vehicle steering capabilities.
Total debt was $109.8 million as of December 31, 2019, down
$12.8 million from the end of 2018. Debt, net of cash, was $96.3
million, or 44.7% net debt to net capitalization. On February 12,
2020, Allied Motion announced a new $225 million senior secured,
revolving credit facility with an accordion feature allowing
expansion up to $300 million. At current debt and leverage levels,
annual net interest expense is expected to be reduced approximately
$0.25 million on a pre-tax basis.
Orders and Backlog Summary ($ in thousands)
Q4
2019
Q3
2019
Q2
2019
Q1
2019
Q4
2018
Orders
$
86,315
$
90,726
$
95,317
$
93,744
$
84,911
Backlog
$
124,950
$
125,821
$
133,507
$
130,646
$
131,997
Foreign currency translation had an immaterial impact on fourth
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 previously
announced new Vehicle market awards is currently included in
backlog. The Company has begun shipments at very low levels for the
first of three seven-year awards totaling $225 million. Allied
Motion expects production for these projects to ramp up through
this year and through 2021.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
March 12, 2020 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 webcast and slide presentation 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 Thursday, March 19, 2020. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13697523 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. Headquartered in Amherst, NY, the Company 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
12, 2020 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 (In thousands, except per share
data) (Unaudited)
For the three months
ended
For the year ended
December 31,
December 31,
2019
2018
2019
2018
Revenue
$
87,925
$
73,962
$
371,084
$
310,611
Cost of goods sold
61,455
52,392
258,500
219,208
Gross profit
26,470
21,570
112,584
91,403
Operating costs and expenses:
Selling
4,163
3,405
16,536
11,807
General and administrative
9,237
8,068
37,688
32,037
Engineering and development
5,898
5,303
23,086
19,913
Business development
49
413
113
762
Amortization of intangible assets
1,427
1,021
5,718
3,655
Total operating costs and expenses
20,774
18,210
83,141
68,174
Operating income
5,696
3,360
29,443
23,229
Other expense (income):
Interest expense
1,160
862
5,134
2,701
Other expense (income), net
347
(35
)
468
(153
)
Total other expense, net
1,507
827
5,602
2,548
Income before income taxes
4,189
2,533
23,841
20,681
(Provision) benefit for income taxes
(700
)
103
(6,819
)
(4,756
)
Net income
$
3,489
$
2,636
$
17,022
$
15,925
Basic earnings per share:
Earnings per share
$
0.37
$
0.28
$
1.81
$
1.72
Basic weighted average common shares
9,419
9,306
9,398
9,265
Diluted earnings per share:
Earnings per share
$
0.37
$
0.28
$
1.80
$
1.70
Diluted weighted average common shares
9,495
9,383
9,461
9,370
ALLIED MOTION TECHNOLOGIES INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands, except per share
data)
December 31,
2019
2018
Assets
Current assets:
Cash and cash equivalents
$
13,416
$
8,673
Trade receivables, net of allowance for
doubtful accounts of $405
and $530 at December 31, 2019 and 2018,
respectively
44,429
43,247
Inventories
53,385
54,971
Prepaid expenses and other assets
4,413
4,003
Total current assets
115,643
110,894
Property, plant and equipment, net
53,008
48,035
Deferred income taxes
490
341
Intangible assets, net
62,497
68,354
Goodwill
52,935
52,639
Right of use asset
16,420
-
Other long-term assets
4,835
5,038
Total Assets
$
305,828
$
285,301
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
23,640
25,867
Accrued liabilities
23,001
18,722
Total current liabilities
46,641
44,589
Long-term debt
109,765
122,516
Deferred income taxes
3,399
3,860
Pension and post-retirement
obligations
5,139
4,293
Right of use liability
13,715
-
Other long-term liabilities
7,975
8,230
Total liabilities
186,634
183,488
Commitments and contingencies
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 9,599 and
9,485 shares issued and outstanding at
December 31, 2019 and
2018, respectively
37,136
33,613
Preferred stock, par value $1.00 per
share, authorized 5,000 shares;
no shares issued or outstanding
-
-
Retained earnings
92,589
76,718
Accumulated other comprehensive loss
(10,531
)
(8,518
)
Total stockholders’ equity
119,194
101,813
Total Liabilities and Stockholders’
Equity
$
305,828
$
285,301
ALLIED MOTION TECHNOLOGIES INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
For the year ended
December 31, 2019
December 31, 2018
Cash Flows From Operating
Activities:
Net income
$
17,022
$
15,925
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
14,857
11,576
Deferred income taxes
(112
)
(76
)
Loss on sale of assets
247
19
Provision for doubtful accounts
(5
)
192
Provision for excess and obsolete
inventory
408
682
Provision for warranty
210
(13
)
Debt issue cost amortization recorded in
interest expense
174
148
Restricted stock compensation
3,203
2,643
Other
21
57
Changes in operating assets and
liabilities, net of acquisitions:
(Increase) decrease in trade
receivables
(1,456
)
(4,110
)
(Increase) decrease in inventories
70
(17,327
)
(Increase) decrease in prepaid expenses
and other assets
(517
)
(835
)
Increase (decrease) in accounts
payable
(1,809
)
6,533
Increase (decrease) in accrued liabilities
and other liabilities
2,217
2,038
Net cash provided by operating
activities
34,530
17,452
Cash Flows From Investing
Activities:
Consideration paid for acquisitions, net
of cash acquired
-
(77,413
)
Purchase of property, plant and
equipment
(14,882
)
(14,333
)
Net cash used in investing activities
(14,882
)
(91,746
)
Cash Flows From Financing
Activities:
Borrowings (repayments) on
lines-of-credit
-
(454
)
Principal payments of long-term debt
(22,500
)
(13,278
)
Proceeds from issuance of long-term
debt
9,639
83,163
Payment of debt issuance costs
-
(72
)
Sale of restricted stock
-
1,076
Dividends paid to stockholders
(1,170
)
(1,079
)
Tax withholdings related to net share
settlements of restricted stock
(746
)
(1,579
)
Stock transactions under employee benefit
stock plans
-
-
Net cash provided by (used in) financing
activities
(14,777
)
67,777
Effect of foreign exchange rate changes on
cash
(128
)
(400
)
Net (decrease) increase in cash and cash
equivalents
4,743
(6,917
)
Cash and cash equivalents at beginning of
period
8,673
15,590
Cash and cash equivalents at end of
period
$
13,416
$
8,673
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 (benefit), 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 twelve months ended December 31,
2019 is as follows:
Three Months Ended
Twelve Months Ended
December 31, 2019
December 31, 2019
Revenue as reported
$
87,925
$
371,084
Foreign currency translation
1,128
7,845
Revenue excluding foreign currency
translation
$
89,053
$
378,929
The Company’s calculation of Adjusted EBITDA for the three and
twelve months ended December 31, 2019 and 2018 is as follows:
Three Months Ended
December 31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Net income
$ 3,489
$ 2,636
$ 17,022
$ 15,925
Interest expense
1,160
862
5,134
2,701
Provision (benefit) for income tax
700
(103)
6,819
4,756
Depreciation and amortization
3,786
3,122
14,857
11,576
EBITDA
9,135
6,517
43,832
34,958
Stock compensation expense
830
855
3,203
2,643
Business development costs
49
413
113
762
Non-income based tax assessment
-
-
384
-
Adjusted EBITDA
$ 10,014
$ 7,785
$ 47,532
$ 38,363
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,
except per share data) (Unaudited)
The Company’s calculation of Adjusted net income and Adjusted
diluted earnings per share for the three and twelve months ended
December 31, 2019 and 2018 is as follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2019
Per diluted share
2018
Per diluted share
2019
Per diluted share
2018
Per diluted share
Net income as reported
$
3,489
$
0.37
$
2,636
$
0.28
$
17,022
$
1.80
$
15,925
$
1.70
Non-GAAP adjustments, net of tax
Non-income based tax
assessment
-
-
-
-
384
0.04
-
-
Income tax provision charge
-
-
-
-
433
0.05
-
-
Impact of the Tax Cuts and
Jobs Act
-
-
(235
)
(0.03
)
-
-
(235
)
(0.03
)
Business development costs
35
-
318
0.03
81
-
586
0.06
Adjusted net income and diluted EPS
$
3,524
$
0.37
$
2,719
$
0.29
$
17,920
$
1.89
$
16,276
$
1.74
Weighted average diluted shares
outstanding
9,495
9,383
9,461
9,370
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/20200311005760/en/
Company Contact: Sue Chiarmonte Allied Motion
Technologies Inc. Phone: 716-242-8634 x602 Email:
sue.chiarmonte@alliedmotion.com
Investor Contact: Deborah K. Pawlowski Kei Advisors LLC
Phone: 716-843-3908 Email: dpawlowski@keiadvisors.com
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