AMHERST, N.Y.--(BUSINESS WIRE)--May 2, 2018--
Allied
Motion Technologies Inc.(NASDAQ: AMOT) (“Company”), a
designer and manufacturer that sells precision motion control products
and solutions to the global market, today reported financial results for
the first quarter ended March 31, 2018. Reported results include the
acquisition of the original equipment steering business of Maval
Industries, LLC (“Maval”) in January 2018.
- First quarter revenue increased 25% to a record $76.6 million
driven primarily by organic growth
- Operating income grew $2.0 million, or 47%, to $6.4 million;
Operating margin expanded 130 basis points to 8.4%
- Net Income rose 58% to $4.2 million; Earnings per share
increased $0.16 to $0.45
- Orders increased 33% over the prior year; Backlog grew 7%
sequentially to a new record level of $107.3 million
- Acquired the original equipment (“OE”) steering business of
Maval Industries, LLC enabling Allied to provide a fully integrated
steering system solution to its customers
“Building market momentum, the traction gained in our targeted markets,
and our recent acquisition contributed to record sales in the first
quarter,” commented Dick Warzala, Chairman and CEO of Allied Motion. “We
are laser-focused on executing our strategy for growth while
streamlining the organization and emphasizing continuous improvement in
quality, delivery, cost and innovation as we drive the One Allied
approach and expand our value proposition for our customers.”
Mr. Warzala concluded, “We continue to be excited about our future and
are well positioned to take share in our served markets, many of which
are also experiencing a lift from the improved economic environment. We
are also encouraged with the prospects of our latest acquisition, and
although the gross margin contribution is lower than our typical
technology based solutions, it enhances our value proposition, deepens
customer relationships and is expected to be neutral to slightly
accretive to earnings in 2018.”
First Quarter 2018 Results (Narrative compares with prior-year
period unless otherwise noted)
Record revenue of $76.6 million was up $15.2 million, or 25%. The
increase was due to growth across all of the Company’s served markets,
and reflects significantly higher sales to the Industrial/Electronics
and Vehicle markets. Excluding the favorable effects of foreign currency
exchange (FX), first quarter revenue was $72.5 million, up 18%. Sales to
U.S. customers were 53% of total sales for the quarter compared with 54%
for the same period last year, with the balance of sales to customers
primarily in Europe, Canada and Asia.
Gross profit rose $4.9 million, or 27%, to $22.6 million, while gross
margin improved 60 basis points to 29.5%. The expansion in gross margin
was due to more favorable mix and higher volume, somewhat offset by a
lower margin contribution from the recent acquisition and a lack of
leverage from FX revenue expansion.
Operating costs and expenses were up $2.8 million to $16.1 million.
General and administrative expense as a percent of sales increased 30
basis points to 9.7% primarily due to higher incentive compensation and
additional personnel to support the Company’s growth. Engineering and
development (“E&D”) was $5.0 million, up 18%, though as a percent of
revenue, E&D decreased 30 basis points to 6.5%. The $151 thousand in
business development costs in the 2018 first quarter was primarily from
the Maval acquisition.
Operating income was up 47%, or $2.0 million, to $6.4 million, and
operating margin expanded 130 basis points to 8.4%.
Interest expense increased $91 thousand to $0.6 million as the Company
took on additional debt to fund part of the Maval acquisition.
The effective tax rate for the quarter was 26.2% compared with 31.0% in
the prior-year period. The Company anticipates its effective tax rate
for 2018 to range from 22% to 26%. Net income increased 58% to
$4.2 million, or $0.45 per diluted share, from $2.7 million, or 0.29 per
diluted share.
Earnings before interest, taxes, depreciation, amortization, stock
compensation expense and business development costs (“Adjusted EBITDA”)
was $9.7 million, up $2.5 million or 34%. As a percent of sales,
Adjusted EBITDA was 12.7% compared with 11.9% in the prior-year period.
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.
Balance Sheet and Cash Flow Review
Allied Motion purchased substantially all of the operating assets
associated with the original equipment steering business of Maval
Industries, LLC on January 19, 2018. The acquisition was funded with
debt, cash generated from operations and cash on hand. Cash and cash
equivalents at the end of the first quarter were $13.0 million compared
with $15.6 million at the end of 2017. Total debt was $63.4 million at
the end of the first quarter, up $10.3 million from year-end 2017. Debt,
net of cash, was $50.4 million, or 34.6% of net debt to capitalization,
up from 30.1% at the end of 2017.
Capital expenditures of $2.2 million included productivity and growth
initiatives. The Company continues to expect to invest $13 million to
$16 million in capital expenditures during fiscal 2018. The higher level
of capital expenditures when compared with 2017 reflects success based
expenditures in support of the significant recent project wins announced
over the last year.
Orders and Backlog Summary ($ in thousands)
|
|
|
|
Q1 2018
|
|
|
Q4 2017
|
|
|
Q3 2017
|
|
|
Q2 2017
|
|
|
Q1 2017
|
Orders
|
|
|
|
$
|
80,699
|
|
|
$
|
72,764
|
|
|
$
|
72,964
|
|
|
$
|
65,754
|
|
|
$
|
60,459
|
Backlog
|
|
|
|
$
|
107,321
|
|
|
$
|
100,708
|
|
|
$
|
93,547
|
|
|
$
|
85,250
|
|
|
$
|
77,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The year-over-year increase in orders and backlog reflect strength
across all of the Company’s served markets as well as the Maval
acquisition. The impact on orders from FX fluctuations was favorable
$4.1 million year-over-year.
Backlog was up 38% over the prior year period and increased nearly 7%
since fourth quarter 2017. 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 were received over the last year and will start
shipping in 2019.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday, May 3,
2018 at 11:00 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 (778) 327-3988. 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 2:00 pm ET on the day of the
call through Thursday, May 10, 2018. To listen to the archived call,
dial (412) 317-6671 and enter replay pin number 10004596 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 motion control components and systems used in a broad
range of industries within our major served markets, which include
Vehicle, Medical, Aerospace & Defense, and Industrial/Electronics. 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 motion control 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, and other associated motion control-related products.
The Company’s growth strategy is focused on becoming the motion solution
leader in its selected target markets by leveraging its “technology/know
how” to develop integrated precision motion 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 May 3, 2018
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 Company's ability to realize the annual
interest expense savings from its debt refinancing; 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, including the ability to
carve out, relocate and separate the Maval OE business; 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
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ALLIED MOTION TECHNOLOGIES INC.
|
CONSOLIDATED STATEMENTS OF INCOME
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
March 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
$
|
76,576
|
|
|
$
|
61,354
|
Cost of goods sold
|
|
|
|
|
54,022
|
|
|
|
43,653
|
Gross profit
|
|
|
|
|
22,554
|
|
|
|
17,701
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
Selling
|
|
|
|
|
2,697
|
|
|
|
2,603
|
General and administrative
|
|
|
|
|
7,456
|
|
|
|
5,749
|
Engineering and development
|
|
|
|
|
4,955
|
|
|
|
4,191
|
Business development
|
|
|
|
|
151
|
|
|
|
-
|
Amortization of intangible assets
|
|
|
|
|
884
|
|
|
|
793
|
Total operating costs and expenses
|
|
|
|
|
16,143
|
|
|
|
13,336
|
Operating income
|
|
|
|
|
6,411
|
|
|
|
4,365
|
Other expense (income):
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
614
|
|
|
|
523
|
Other expense, net
|
|
|
|
|
106
|
|
|
|
(10)
|
Total other expense, net
|
|
|
|
|
720
|
|
|
|
513
|
Income before income taxes
|
|
|
|
|
5,691
|
|
|
|
3,852
|
Provision for income taxes
|
|
|
|
|
(1,493)
|
|
|
|
(1,195)
|
Net income
|
|
|
|
$
|
4,198
|
|
|
$
|
2,657
|
|
|
|
|
|
|
|
|
Basic earnings per share:
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
$
|
0.45
|
|
|
$
|
0.29
|
Basic weighted average common shares
|
|
|
|
|
9,251
|
|
|
|
9,068
|
Diluted earnings per share:
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
$
|
0.45
|
|
|
$
|
0.29
|
Diluted weighted average common shares
|
|
|
|
|
9,325
|
|
|
|
9,229
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
4,198
|
|
|
$
|
2,657
|
|
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
Foreign currency translation adjustment
|
|
|
|
|
1,687
|
|
|
|
674
|
Change in accumulated gain (loss) on derivatives
|
|
|
|
|
604
|
|
|
|
(86)
|
Comprehensive income
|
|
|
|
$
|
6,489
|
|
|
$
|
3,245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIED MOTION TECHNOLOGIES INC.
|
CONSOLIDATED BALANCE SHEETS
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2018
|
|
|
December 31, 2017
|
Assets |
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
$
|
13,003
|
|
|
$
|
15,590
|
Trade receivables, net of allowance for doubtful accounts
|
|
|
|
|
|
|
|
of $411 and $341 at March 31, 2018 and December 31, 2017,
respectively
|
|
|
|
|
42,822
|
|
|
|
31,822
|
Inventories
|
|
|
|
|
39,619
|
|
|
|
32,568
|
Prepaid expenses and other assets
|
|
|
|
|
4,685
|
|
|
|
3,460
|
Total current assets
|
|
|
|
|
100,129
|
|
|
|
83,440
|
Property, plant and equipment, net
|
|
|
|
|
39,375
|
|
|
|
38,403
|
Deferred income taxes
|
|
|
|
|
3,493
|
|
|
|
14
|
Intangible assets, net
|
|
|
|
|
35,123
|
|
|
|
32,073
|
Goodwill
|
|
|
|
|
35,679
|
|
|
|
29,531
|
Other long term assets
|
|
|
|
|
4,444
|
|
|
|
4,461
|
Total assets
|
|
|
|
$
|
218,243
|
|
|
$
|
187,922
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Debt obligations
|
|
|
|
|
478
|
|
|
|
461
|
Accounts payable
|
|
|
|
|
22,675
|
|
|
|
15,351
|
Accrued liabilities
|
|
|
|
|
15,870
|
|
|
|
14,270
|
Total current liabilities
|
|
|
|
|
39,023
|
|
|
|
30,082
|
Long-term debt
|
|
|
|
|
62,928
|
|
|
|
52,694
|
Deferred income taxes
|
|
|
|
|
7,106
|
|
|
|
3,609
|
Pension and post-retirement obligations
|
|
|
|
|
4,743
|
|
|
|
4,667
|
Other long term liabilities
|
|
|
|
|
9,332
|
|
|
|
9,523
|
Total liabilities
|
|
|
|
|
123,132
|
|
|
|
100,575
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
Common stock, no par value, authorized 50,000 shares;
|
|
|
|
|
|
|
|
9,482 and 9,427 shares issued and outstanding at March 31, 2018
and December 31, 2017, respectively
|
|
|
|
|
32,327
|
|
|
|
31,051
|
Preferred stock, par value $1.00 per share, authorized
|
|
|
|
|
|
|
|
5,000 shares; no shares issued or outstanding
|
|
|
|
|
-
|
|
|
|
-
|
Retained earnings
|
|
|
|
|
66,079
|
|
|
|
61,882
|
Accumulated other comprehensive loss
|
|
|
|
|
(3,295)
|
|
|
|
(5,586)
|
Total stockholders’ equity
|
|
|
|
|
95,111
|
|
|
|
87,347
|
Total Liabilities and Stockholders’ Equity
|
|
|
|
$
|
218,243
|
|
|
$
|
187,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLIED MOTION TECHNOLOGIES INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(In thousands)
|
|
|
|
|
|
|
|
|
|
For the three months ended |
|
|
|
|
March 31, |
|
|
|
|
2018 |
|
|
2017 |
Cash Flows From Operating Activities: |
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
4,198
|
|
|
$
|
2,657
|
Adjustments to reconcile net income to net cash provided by
|
|
|
|
|
|
|
|
operating activities
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
2,791
|
|
|
|
2,450
|
Deferred income taxes
|
|
|
|
|
2,822
|
|
|
|
(48)
|
Stock compensation expense
|
|
|
|
|
496
|
|
|
|
466
|
Debt issue cost amortization recorded in interest expense
|
|
|
|
|
37
|
|
|
|
37
|
Other
|
|
|
|
|
609
|
|
|
|
248
|
Changes in operating assets and liabilities, excluding
|
|
|
|
|
|
|
|
changes due to acquisition:
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
|
|
(8,231)
|
|
|
|
(4,768)
|
Inventories
|
|
|
|
|
(3,887)
|
|
|
|
221
|
Prepaid expenses and other assets
|
|
|
|
|
(1,408)
|
|
|
|
150
|
Accounts payable
|
|
|
|
|
5,479
|
|
|
|
1,302
|
Accrued liabilities
|
|
|
|
|
(1,211)
|
|
|
|
(383)
|
Net cash provided by operating activities
|
|
|
|
|
1,695
|
|
|
|
2,332
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities: |
|
|
|
|
|
|
|
Consideration paid for acquisition
|
|
|
|
|
(13,312)
|
|
|
|
-
|
Purchase of property and equipment
|
|
|
|
|
(2,222)
|
|
|
|
(1,288)
|
Net cash used in investing activities
|
|
|
|
|
(15,534)
|
|
|
|
(1,288)
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities: |
|
|
|
|
|
|
|
Borrowings on long-term debt
|
|
|
|
|
14,500
|
|
|
|
-
|
Principal payments of long-term debt
|
|
|
|
|
(4,350)
|
|
|
|
(3,000)
|
Dividends paid to stockholders
|
|
|
|
|
-
|
|
|
|
(228)
|
Stock transactions under employee benefit stock plans
|
|
|
|
|
849
|
|
|
|
628
|
Net cash provided by (used in) financing activities
|
|
|
|
|
10,999
|
|
|
|
(2,600)
|
Effect of foreign exchange rate changes on cash
|
|
|
|
|
253
|
|
|
|
121
|
Net decrease in cash and cash equivalents
|
|
|
|
|
(2,587)
|
|
|
|
(1,435)
|
Cash and cash equivalents at beginning of period
|
|
|
|
|
15,590
|
|
|
|
15,483
|
Cash and cash equivalents at end of period
|
|
|
|
$
|
13,003
|
|
|
$
|
14,048
|
|
|
|
|
|
|
|
|
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 months ended
March 31, 2018 and 2017 is as follows:
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|
Three Months Ended |
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March 31, |
|
|
|
|
2018 |
|
|
2017 |
Net income
|
|
|
|
$ 4,198
|
|
|
$ 2,657
|
Interest expense
|
|
|
|
614
|
|
|
523
|
Provision for income tax
|
|
|
|
1,493
|
|
|
1,195
|
Depreciation and amortization
|
|
|
|
2,791
|
|
|
2,450
|
EBITDA |
|
|
|
$ 9,096 |
|
|
$ 6,825 |
Stock compensation expense
|
|
|
|
496
|
|
|
466
|
Business development costs
|
|
|
|
151
|
|
|
-
|
Adjusted EBITDA |
|
|
|
$ 9,743 |
|
|
$ 7,291 |
|
|
|
|
|
|
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View source version on businesswire.com: https://www.businesswire.com/news/home/20180502006719/en/
Source: Allied Motion Technologies Inc.
Allied Motion Technologies Inc. Sue Chiarmonte, 716-242-8634 x602 sue.chiarmonte@alliedmotion.com or Investors: Kei
Advisors LLC Deborah K. Pawlowski, 716-843-3908 dpawlowski@keiadvisors.com
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