- Fourth quarter revenue of $93.0 million was up 6% on strong
Medical and Vehicle market demand
- Achieved record orders of $108.5 million and record backlog of
$141.3 million at year-end
- Continued strong cash generation despite challenging macro
environment:
- Quarter: Cash flow from operations of $9.8 million and $7.0
million of free cash flow*
- Full year: Cash flow from operations of $24.8 million and $15.5
million of free cash flow*
- Paid down $4.6 million of debt in the quarter and nearly $17.0
million during the full year 2020
*Free cash flow is a non-GAAP metric defined as cash flow from
operations less capital expenditures
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, 2020. Results include the Dynamic
Controls Group (“Dynamic Controls”) acquisition that was completed
on March 7, 2020.
“I am incredibly proud of the passion, teamwork and dedication
shown throughout our organization as we navigated a difficult
environment while advancing our strategic priorities and delivering
solid results,” commented Dick Warzala, Chairman and CEO. “Our
fourth quarter performance was supported by record orders from
favorable trends within our Medical markets, and exceptional
engagement and focus on executing a significant recovery in the
powersports portion of our Vehicle markets. This demand, combined
with supply chain constraints, resulted in some inefficiencies and
unintended costs as our teams worked hard to meet our commitments.
We also incurred additional tariffs given the expiration of certain
exemptions during the fourth quarter. Ultimately, we believe we
will mitigate these costs over time, though some impact is expected
to continue over the coming quarters.
He added, “While the economic and operating outlooks for 2021
remain uncertain, we are in a strong financial and operational
position. Our record level of backlog, diversified end market
penetration and demonstrated agility positions us well to perform
across varying market trends and gives us confidence that we can
drive further profitable growth, efficiency and enhanced free cash
flow, while delivering long-term value for our shareholders.”
Fourth Quarter 2020 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue of $93.0 million was up 6%, reflecting strong demand in
the Medical markets, which increased 69% and included the
contribution from Dynamic Controls. The Vehicle market continued to
show strength, growing 6.5% over the 2019 fourth quarter. Those
increases were partially offset by lower sales in the A&D and
Industrial markets, reflecting the continued impact on those
sectors from the pandemic. The impact of foreign currency exchange
rate fluctuations on revenue was favorable $2.8 million for the
fourth quarter. 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 was 27.9% compared with 30.1% in the fourth quarter
of 2019. The decline was primarily attributable to an unfavorable
mix, the under absorption of some fixed costs in certain facilities
and nearly $800 thousand of higher costs as a result of increased
tariffs and duties, along with additional freight due to supply
chain disruptions and customer requirements. The Company is working
to mitigate these costs but expects these headwinds to continue
into 2021.
Operating costs and expenses as a percent of revenue were down
90 basis points to 22.8%, as higher volume more than offset
incremental expenses related to Dynamic Controls. Operating income
was $4.8 million, or 5.1% of sales, compared with $5.7 million, or
6.5%.
Given the weakening of the U.S. dollar during the fourth quarter
and Allied’s expanded global production, the Company incurred $0.5
million of foreign currency losses on the revaluation of short-term
assets and liabilities. Offsetting that amount was the return of a
$0.4 million withholding tax that had been charged to the Company
in the third quarter of 2019 due to tax assessments in a foreign
jurisdiction for a previous acquisition. These two items offset
each other within other expense, net in the condensed consolidated
statements of income.
Fourth quarter net income was $2.7 million, or $0.28 per diluted
share, compared with $3.5 million, or $0.37 per diluted share, in
the 2019 fourth quarter. The effective tax rate for the quarter was
26.2%.
Earnings before interest, taxes, depreciation, amortization,
stock-based compensation expense, business development costs,
foreign currency gains/losses, and non-income based tax assessment
(“Adjusted EBITDA”) was $9.9 million compared with $10.3 million in
the prior-year period. As a percent of sales, Adjusted EBITDA was
10.7% versus 11.7%. 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 2020 Results (Narrative compares with
prior-year unless otherwise noted)
Revenue of $366.7 million was down 1%, reflecting strong growth
in Medical markets of more than 61%, which included the
contribution from Dynamic Controls. All other market verticals saw
reduced demand as a result of the global economic impact of the
COVID-19 pandemic. For the year, the impact of FX fluctuations on
revenue was $1.8 million favorable. Sales to U.S. customers were
53% of total sales compared with 57% for the same period last year,
with the balance of sales to customers primarily in Europe, Canada
and Asia.
Gross margin was 29.6% compared with 30.3% as productivity, cost
containment efforts and the favorable impact of Dynamic Controls
mostly offset the impact of lower revenue and higher tariffs,
duties, and freight.
Operating costs and expenses as a percent of revenue were 23.3%,
up 90 basis points, largely driven by the addition of Dynamic
Controls and higher business development costs. As a result,
operating margin declined 160 basis points to 6.3%.
Net income was $13.6 million, or $1.43 per diluted share, in
2020. Excluding atypical tax items, business development costs and
foreign currency gains/losses, adjusted net income was $14.3
million, or $1.50 per diluted share, compared with $18.0 million,
or $1.90 per diluted share in 2019. See the attached table for a
description of non-GAAP financial measures and reconciliation table
for Adjusted Net Income and Diluted Earnings per Share. The
effective tax rate for 2020 was 27.3%. Allied Motion expects its
income tax rate for full year 2021 to range between 27% to 29%.
Adjusted EBITDA was $43.1 million, or 11.8% of sales, compared
with $47.6 million, or 12.8% of sales, in the prior year. 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 and cash equivalents increased $9.7 million to $23.1
million compared with year-end 2019. The Company generated net cash
from operations of $9.8 million in the fourth quarter and $24.8
million for the full year period.
Total debt of $120.1 million was up $10.3 million from year-end
2019, reflecting borrowings to acquire Dynamic Controls in March
2020. In the quarter, the Company paid down $4.6 million in debt
and $16.9 million for the full year period. Debt, net of cash, was
$96.9 million, or 40.4% of net debt to capitalization.
Capital expenditures were $9.4 million for the full year period
and largely focused on new customer projects, advancing the large,
previously-announced Vehicle market project wins and
next-generation off-road vehicle steering capabilities. The Company
expects 2021 capital expenditures to be approximately $12 million
to $15 million, reflecting some capital projects that had been
deferred from 2020.
Orders and Backlog Summary ($ in thousands)
Q4
2020
Q3 2020 Q2 2020
Q1
2020
Q4
2019
Orders
$
108,466
$
88,958
$
80,365
$
92,923
$
86,315
Backlog
$
141,344
$
123,700
$
127,701
$
133,187
$
124,950
Orders of $108.5 million reached a record level, increasing 26%
over the 2019 fourth quarter. Foreign currency translation had a
favorable $3.1 million impact on fourth quarter orders compared
with the prior-year period. Backlog increased 14% sequentially and
13% year-over-year to a record $141.3 million. The time to convert
the majority of backlog to sales is approximately three to six
months. Included in the current backlog is approximately $8 million
of the previously announced $325 million of Vehicle market awards.
The Company has begun shipments for the first of four, seven-year
awards, and all four awards are expected to concurrently be at full
rate production in 2024.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
March 11, 2021 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:
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 18, 2021. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13714999 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 www.alliedmotion.com.
Safe Harbor Statement
The statements in this news release and in the Company’s March
11, 2021 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, 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, the severity, magnitude and duration of the COVID-19
pandemic, including impacts of the pandemic and of businesses’ and
governments’ responses to the pandemic on our operations and
personnel, and on commercial activity and demand across our and our
customers’ businesses, and on global supply chains; our inability
to predict the extent to which the COVID-19 pandemic and related
impacts will continue to adversely impact our business operations,
financial performance, results of operations, financial position,
the prices of our securities and the achievement of our strategic
objectives 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,
2020
2019
2020
2019
Revenue
$
92,998
$
87,925
$
366,694
$
371,084
Cost of goods sold
67,065
61,455
258,119
258,500
Gross profit
25,933
26,470
108,575
112,584
Operating costs and expenses:
Selling
3,573
4,163
15,392
16,536
General and administrative
9,421
9,237
38,301
37,688
Engineering and development
6,622
5,898
25,487
23,086
Business development
41
49
473
113
Amortization of intangible assets
1,505
1,427
5,928
5,718
Total operating costs and expenses
21,162
20,774
85,581
83,141
Operating income
4,771
5,696
22,994
29,443
Other expense, net:
Interest expense
917
1,160
3,716
5,134
Other expense, net
195
347
502
468
Total other expense, net
1,112
1,507
4,218
5,602
Income before income taxes
3,659
4,189
18,776
23,841
Provision for income taxes
(960)
(700)
(5,133)
(6,819)
Net income
$
$2,699
$
$3,489
$
$13,643
$
$17,022
Basic earnings per share:
Earnings per share
$
0.28
$
0.37
$
1.44
$
1.81
Basic weighted average common shares
9,519
9,419
9,495
9,398
Diluted earnings per share:
Earnings per share
$
0.28
$
0.37
$
1.43
$
1.80
Diluted weighted average common shares
9,602
9,495
9,555
9,461
ALLIED MOTION TECHNOLOGIES
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except
per share data) (Unaudited)
December 31,
2020
2019
Assets
Current assets:
Cash and cash equivalents
$
23,131
$
13,416
Trade receivables, net of provision for
credit losses of $382 and allowance for doubtful accounts of $405
at December 31, 2020 and December 31, 2019, respectively
47,377
44,429
Inventories
62,978
53,385
Prepaid expenses and other assets
8,728
4,413
Total current assets
142,214
115,643
Property, plant and equipment, net
55,428
53,008
Deferred income taxes
330
490
Intangible assets, net
65,859
62,497
Goodwill
61,860
52,935
Right of use assets
19,023
16,420
Other long-term assets
4,483
4,835
Total Assets
$
349,197
$
305,828
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
27,668
23,640
Accrued liabilities
24,862
23,001
Total current liabilities
52,530
46,641
Long-term debt
120,079
109,765
Deferred income taxes
4,659
3,399
Pension and post-retirement
obligations
5,340
5,139
Right of use liabilities
14,975
13,715
Other long-term liabilities
8,558
7,975
Total liabilities
206,141
186,634
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 9,754 and 9,599 shares issued and outstanding at
December 31, 2020 and December 31, 2019, respectively
41,278
37,136
Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or outstanding
—
—
Retained earnings
105,065
92,589
Accumulated other comprehensive loss
(3,287)
(10,531)
Total stockholders’ equity
143,056
119,194
Total Liabilities and Stockholders’
Equity
$
349,197
$
305,828
ALLIED MOTION TECHNOLOGIES
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited)
For the year ended
December 31,
2020
2019
Cash Flows From Operating
Activities:
Net income
$
13,643
$
17,022
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
15,985
14,857
Deferred income taxes
(519)
(112)
Loss on sale of assets
97
247
Provision for doubtful accounts
91
(5)
Provision for excess and obsolete
inventory
1,106
408
Provision for warranty
34
210
Debt issue cost amortization recorded in
interest expense
144
174
Restricted stock compensation
3,550
3,203
Other
(521)
21
Changes in operating assets and
liabilities, net of acquisition:
Trade receivables
2,711
(1,456)
Inventories
(4,686)
70
Prepaid expenses and other assets
(2,264)
(517)
Accounts payable
(1,874)
(1,809)
Accrued liabilities
(2,659)
2,217
Net cash provided by operating
activities
24,838
34,530
Cash Flows From Investing
Activities:
Purchase of property and equipment
(9,371)
(14,882)
Cash paid for acquisitions, net of cash
acquired
(14,728)
—
Net cash used in investing activities
(24,099)
(14,882)
Cash Flows From Financing
Activities:
Principal payments of long-term debt
(16,897)
(22,500)
Proceeds from issuance of long-term
debt
26,979
9,639
Payment of debt issuance costs
(401)
—
Dividends paid to stockholders
(1,160)
(1,170)
Tax withholdings related to net share
settlements of restricted stock
(1,032)
(746)
Net cash provided by (used in) financing
activities
7,489
(14,777)
Effect of foreign exchange rate changes on
cash
1,487
(128)
Net increase in cash and cash
equivalents
9,715
4,743
Cash and cash equivalents at beginning of
period
13,416
8,673
Cash and cash equivalents at end of
period
$
23,131
$
13,416
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures (In thousands)
(Unaudited)
In addition to reporting revenue and net income, which are U.S.
generally accepted accounting principle (“GAAP”) measures, the
Company presents Revenue excluding foreign currency exchange rate
impacts, and EBITDA and Adjusted EBITDA (earnings before interest,
income taxes, depreciation and amortization, stock-based
compensation expense, business development costs, foreign currency
gains/losses, and non-income based tax assessment), which are
non-GAAP measures.
The Company believes that Revenue excluding foreign currency
exchange rate 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 EBITDA and Adjusted EBITDA are often a
useful measure of a Company’s operating performance and are 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, foreign currency
gains/losses on short-term assets and liabilities, and other items
that are not indicative of the Company’s core operating
performance. EBITDA and Adjusted EBITDA do 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,
2020 is as follows:
Three Months Ended
Twelve Months Ended
December 31, 2020
December 31, 2020
Revenue as reported
$
92,998
$
366,694
Currency impact
(2,782
)
(1,811
)
Revenue excluding foreign currency
exchange impacts
$
90,216
$
364,883
The Company’s calculation of Adjusted EBITDA for the three and
twelve months ended December 31, 2020 and 2019 is as follows:
Three Months Ended
December 31,
Twelve Months Ended December
31,
2020
2019
2020
2019
Net income
$ 2,699
$ 3,489
$ 13,643
$ 17,022
Interest expense
917
1,160
3,716
5,134
Provision for income taxes
960
700
5,133
6,819
Depreciation and amortization
4,303
3,786
15,985
14,857
EBITDA
8,879
9,135
38,477
43,832
Stock-based compensation expense
910
830
3,550
3,203
Foreign currency loss
542
267
1,035
111
Business development costs
41
49
473
113
Non-income based tax assessment (gain)
loss
(424)
-
(424)
384
Adjusted EBITDA
$ 9,948
$ 10,281
$ 43,111
$ 47,643
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of GAAP Net Income and Diluted Earnings per Share
to Non-GAAP Adjusted Net Income 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, 2020 and 2019 is as follows:
Three Months Ended
Twelve Months Ended
December 31,
December 31,
2020
Per diluted share
2019
Per diluted share
2020
Per diluted share
2019
Per diluted share
Net income as reported
$
2,699
$
0.28
$
3,489
$
0.37
$
13,643
$
1.43
$
17,022
$
1.80
Non-GAAP adjustments, net of tax
Non-income based tax assessment (gain)
loss
(424
)
(0.04
)
-
-
(424
)
(0.04
)
384
0.04
Income tax provision charge
-
-
-
-
-
-
433
0.05
Foreign currency loss
400
0.04
191
0.02
752
0.08
79
0.01
Business development costs
30
0.00
35
0.00
344
0.04
81
0.01
Adjusted net income and diluted EPS
$
2,705
$
0.28
$
3,715
$
0.39
$
14,315
$
1.50
$
17,999
$
1.90
Weighted average diluted shares
outstanding
9,602
9,495
9,555
9,461
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/20210310005940/en/
Investors: Deborah K. Pawlowski Kei Advisors LLC Phone:
716-843-3908 Email: dpawlowski@keiadvisors.com
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