Automation & Specialty
Platform (“A&S”) Drives 101%
Year-Over-Year Increase in Q1 Sales to
$482.8M
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 first quarter ended
March 31, 2019. Except where otherwise noted, financial results for
the first quarter of 2019 include the A&S business whereas
results for the prior year period do not include financial results
of the A&S business on a proforma basis.
Financial Highlights
- First-quarter 2019 net sales were $482.8 million, up 101% from
$240.4 million in the first quarter of 2018. Organic sales growth
was 1.6% for the combined business on an unaudited pro forma basis,
compared to the first quarter of 2018.*
- First-quarter net income was $35.2 million, or $0.55 per
diluted share, compared with $9.0 million, or $0.31 per diluted
share, in the first quarter of 2018. Non-GAAP net income in
the first quarter of 2019 was $51.7 million, or $0.80 per diluted
share. This is compared with non-GAAP net income of $21.2 million,
or $0.72 per diluted share, in the first quarter of
2018.*
- Non-GAAP adjusted EBITDA in the first quarter of 2019 was
$105.0 million, or 21.7% of net sales.*
- Operating income margin in the first quarter of 2019 was 13.8%
compared to 8.2% in the first quarter of 2018. Gross profit margin
in the first quarter of 2019 was 36.2%, a 530 basis point increase
over 30.9% in the first quarter of 2018. Non-GAAP operating income
margin in the first quarter of 2019 was 18.2%, a 630 basis point
increase from 11.9% in the first quarter of 2018.*
- Cash flow from operations for the first quarter 2019 of $39.3
million led to free cash flow of $25.3 million, compared with
negative free cash flow of $3.3 million for the first quarter of
2018.*
Strategic Highlights
- Integration of the A&S business advancing on track with
tactical stage of integration successfully completed.
- Relocated shared facility in China on time and on budget, and
announced closure of significant facility in the Northeast
(production to be relocated to three U.S. facilities).
- Launched sales team collaboration program.
- Advanced strategic supply chain initiative to identify indirect
and direct savings.
- On track to achieve $10.0 million to $12.0 million of synergies
in 2019 and deliver a total of $52.0 million of synergies by year
four.
- Paid down $15.0 million of debt in Q1 2019.
Management Comments
“We began the year with a strong first quarter that reflects the
financial and strategic benefits of the A&S business
combination and the new Altra,” said Carl Christenson, Altra’s
Chairman and CEO. “First-quarter revenues of $482.8 million were
more than double the prior-year quarter as a result of the merger
and the continued positive performance of both businesses.
Operationally, the business continues to perform well as we
delivered solid margins across the board, including gross profit
margin of 36.2%, non-GAAP adjusted operating income margin of 18.2%
and non-GAAP adjusted EBITDA margin of 21.7%. Our focus on cash
management yielded $25.3 million of free cash flow in what is
seasonally our lowest quarter for free cash flow.*
“The integration of the A&S business and Altra continues to
advance exceptionally well,” said Christenson. “With the completion
of essentially all the integration activities behind us, our focus
has shifted to advancing our strategic initiatives to drive the
synergies. In the first quarter, we launched our sales
collaboration program, made meaningful progress with our supply
chain optimization efforts and continued to integrate our world
class business systems across the combined organization.
“First quarter revenues were in line with our expectations as
growth in the industrial economy has moderated. Additionally, many
of the economic indicators that were negative in the fourth quarter
of last year and early in the first quarter of this year have
improved resulting in an improved outlook for the overall global
economy, including an improved outlook in China and Germany, which
are key geographies for Altra. Based on this and our ongoing
success with the A&S integration, we are confident in our
ability to deliver continued sales, earnings and free cash flow
growth in 2019,” concluded Christenson.
Business Outlook
Altra is reiterating its top-line and profitability guidance for
full year 2019.
- Full-year 2019 sales are expected to be $1,920 - $1,950
million.
- GAAP diluted EPS in the range of $2.10 to $2.18.
- Non-GAAP diluted EPS in the range of $3.02 to $3.18. *
- Non-GAAP adjusted EBITDA in the range of $415 to $430 million.
*
- Tax rate for the full year is now expected to be approximately
24.0% to 25.8% before discrete items, a decrease from previous
guidance of 25.0% to 26.5%, capital expenditures in the range of
$60 to $65 million, and depreciation and amortization in the range
of $130 to $140 million.
Reconciliations of Non-GAAP Disclosures
(Amounts in Millions of Dollars, except per share
information)
*Reconciliation of Non-GAAP Net Income:
|
Quarter Ended March 31, |
|
|
2019 |
|
|
2018 |
|
Net income |
$ |
35.2 |
|
|
$ |
9.0 |
|
|
|
|
|
|
|
|
|
Restructuring
costs |
$ |
2.3 |
|
|
$ |
0.9 |
|
Loss on partial
settlement of pension plan |
|
- |
|
|
|
5.1 |
|
Acquisition related
stock compensation expense |
|
1.1 |
|
|
|
- |
|
Acquisition related
amortization expense |
|
17.8 |
|
|
|
2.5 |
|
Acquisition related
expenses |
|
0.5 |
|
|
|
5.4 |
|
Tax impact of above
adjustments |
|
(5.2 |
) |
|
|
(1.7 |
) |
Non-GAAP net
income* |
$ |
51.7 |
|
|
$ |
21.2 |
|
Non-GAAP diluted
earnings per share* |
$ |
0.80 |
|
|
$ |
0.72 |
|
|
|
|
|
|
|
|
|
*Reconciliation of Free Cash Flow
|
|
|
Quarter Ended March 31, |
|
|
|
|
2019 |
|
|
2018 |
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
Net cash flows from
operating activities |
|
|
$ |
39.3 |
|
|
$ |
3.7 |
|
Purchase of property,
plant and equipment |
|
|
|
(14.0 |
) |
|
|
(7.0 |
) |
Free cash flow* |
|
|
$ |
25.3 |
|
|
$ |
(3.3 |
) |
|
|
|
|
|
|
|
|
|
|
*Reconciliation of Net Debt
|
|
|
March 31, 2019 |
|
|
December 31, 2018 |
|
Debt |
|
|
$ |
1,719.8 |
|
|
$ |
1,734.0 |
|
Cash |
|
|
|
(152.4 |
) |
|
|
(169.0 |
) |
Net debt |
|
|
$ |
1,567.4 |
|
|
$ |
1,565.0 |
|
*Reconciliation of Non-GAAP Income from Operations:
|
Quarter Ended March 31, |
|
|
2019 |
|
|
2018 |
|
Income from
operations |
$ |
66.4 |
|
|
$ |
19.7 |
|
Income from operations as
a percent of net sales |
|
13.8 |
% |
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
Restructuring costs |
$ |
2.3 |
|
|
$ |
0.9 |
|
Acquisition related stock
compensation expense |
|
1.1 |
|
|
|
- |
|
Acquisition related
amortization expense |
|
17.8 |
|
|
|
2.5 |
|
Acquisition related
expenses |
|
0.5 |
|
|
|
5.4 |
|
Non-GAAP income
from operations* |
|
88.1 |
|
|
|
28.5 |
|
Non-GAAP Income from operations as a percent of
net sales |
|
18.2 |
% |
|
|
11.9 |
% |
|
|
|
|
|
|
|
|
*Reconciliation of GAAP to Non-GAAP Operating Income and
Operating Income Margin
Selected Statement of Income Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2019 |
|
|
|
GAAP OperatingIncome |
|
|
Adjustments |
|
|
Non-GAAP OperatingIncome |
|
Net sales |
|
$ |
482.8 |
|
|
$ |
- |
|
|
$ |
482.8 |
|
Cost of sales |
|
|
307.9 |
|
|
|
- |
|
|
|
307.9 |
|
Gross profit |
|
|
174.9 |
|
|
|
- |
|
|
|
174.9 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general & administrative expenses |
|
|
90.9 |
|
|
|
19.4 |
|
|
|
71.5 |
|
Research
and development expenses |
|
|
15.3 |
|
|
|
- |
|
|
|
15.3 |
|
Restructuring costs |
|
|
2.3 |
|
|
|
2.3 |
|
|
|
- |
|
Income from Operations |
|
$ |
66.4 |
|
|
$ |
21.7 |
|
|
$ |
88.1 |
|
GAAP and Non-GAAP Income from operations as a
percent of net sales |
|
|
13.8 |
% |
|
|
|
|
|
|
18.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended March 31, 2018 |
|
|
|
GAAP OperatingIncome |
|
|
Adjustments |
|
|
Non-GAAP OperatingIncome |
|
Net sales |
|
$ |
240.4 |
|
|
$ |
- |
|
|
$ |
240.4 |
|
Cost of sales |
|
|
166.2 |
|
|
|
- |
|
|
|
166.2 |
|
Gross profit |
|
|
74.2 |
|
|
|
- |
|
|
|
74.2 |
|
Operating Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general & administrative expenses |
|
|
47.1 |
|
|
|
7.9 |
|
|
|
39.2 |
|
Research
and development expenses |
|
|
6.5 |
|
|
|
- |
|
|
|
6.5 |
|
Restructuring costs |
|
|
0.9 |
|
|
|
0.9 |
|
|
|
- |
|
Income from
Operations |
|
$ |
19.7 |
|
|
$ |
8.8 |
|
|
$ |
28.5 |
|
GAAP and Non-GAAP Income from operations as a
percent of net sales |
|
|
8.2 |
% |
|
|
|
|
|
|
11.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
*Reconciliation of Non-GAAP adjusted EBITDA:
|
Quarter Ended March 31, 2019 |
|
Net income |
$ |
35.2 |
|
|
|
|
|
Asset impairment and
other, net |
|
1.3 |
|
Tax expense |
|
10.3 |
|
Interest expense |
|
19.8 |
|
Depreciation expense |
|
14.3 |
|
Acquisition related
amortization expense |
|
17.8 |
|
Acquisition related
expenses |
|
0.5 |
|
Loss on partial settlement
of pension plans |
|
- |
|
Stock compensation
expense |
|
3.5 |
|
Restructuring costs |
|
2.3 |
|
Non-GAAP adjusted
EBITDA |
$ |
105.0 |
|
|
|
|
|
*Reconciliation of 2019 Non-GAAP Net Income and Non-GAAP Diluted
EPS Guidance:
|
|
Projected
FiscalYear 2019Net Income |
|
Projected
FiscalYear 2019Diluted EPS |
Net income and diluted
earnings per share |
|
$136.1 - $141.0 |
|
$2.10 - $2.18 |
Restructuring
costs |
|
5.0 -
7.5 |
|
|
Acquisition related
stock compensation expense |
|
3.1 -
3.3 |
|
|
Acquisition related
amortization expense |
|
70.4 -
75.0 |
|
|
Tax impact of above
adjustments(1) (2) |
|
(19.2) - (21.0) |
|
|
Non-GAAP Net Income and Non-GAAP Diluted
EPS Guidance* |
|
$195.4 - $205.8 |
|
$3.02 - $3.18 |
(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 24.5% by the above items |
|
*Reconciliation of 2019 Non-GAAP adjusted EBITDA Guidance:
|
|
Fiscal Year 2019 |
Net income |
|
$136.1 - $141.0 |
Interest expense |
|
82.5 - 79.0 |
Tax expense |
|
47.4 - 49.0 |
Depreciation
expense |
|
59.6 - 65.0 |
Acquisition related
amortization expense |
|
70.4 - 75.0 |
Stock based
compensation |
|
14.0 |
Restructuring
costs |
|
5.0 - 7.0 |
Non-GAAP adjusted EBITDA* |
|
$415.0 - $430.0 |
|
|
|
Conference Call
The Company will conduct an investor conference call to discuss
its unaudited first-quarter financial results on Friday, April 26,
2019 at 10:00 a.m. ET. The public is invited to listen to the
conference call by dialing (877) 397-8668 domestically or (647)
689-5686 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 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 April 26, 2019 through
midnight on May 10, 2019. To listen to the replay, dial (800)
585-8367 domestically or (416) 621-4642 for international access
(Conference ID: 8074569). A webcast replay also will be available.
About Altra Industrial Motion Corp.
Altra Industrial Motion Corp. is a premier industrial
manufacturer of 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
9,300 employees and over 50 production facilities in 16 countries
around the world.
|
|
Altra Industrial Motion Corp. |
|
Consolidated
Balance Sheets |
|
|
|
|
|
|
|
In Millions of Dollars |
March 31, 2019 |
|
|
December 31, 2018 |
|
Assets: |
(Unaudited) |
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
Cash and
cash equivalents |
$ |
152.4 |
|
|
$ |
169.0 |
|
Trade
receivables, net |
|
281.8 |
|
|
|
259.8 |
|
Inventories |
|
241.0 |
|
|
|
231.2 |
|
Income
tax receivable |
|
8.5 |
|
|
|
10.2 |
|
Prepaid
expenses and other current assets |
|
32.8 |
|
|
|
33.1 |
|
Assets
held for sale |
|
- |
|
|
|
0.7 |
|
Total current
assets |
|
716.5 |
|
|
|
703.9 |
|
Property,
plant and equipment, net |
|
360.5 |
|
|
|
364.4 |
|
Intangible assets, net |
|
1,559.9 |
|
|
|
1,585.7 |
|
Goodwill |
|
1,683.5 |
|
|
|
1,662.3 |
|
Deferred
income taxes |
|
3.3 |
|
|
|
4.9 |
|
Other
non-current assets, net |
|
13.3 |
|
|
|
15.9 |
|
Operating
lease, right of use asset |
|
43.3 |
|
|
|
- |
|
Total assets |
$ |
4,380.3 |
|
|
$ |
4,337.2 |
|
|
|
|
|
|
|
|
|
Liabilities and
stockholders' equity |
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
Accounts
payable |
$ |
172.3 |
|
|
$ |
175.8 |
|
Accrued
payroll |
|
53.6 |
|
|
|
57.0 |
|
Accruals
and other current liabilities |
|
78.7 |
|
|
|
79.6 |
|
Income
tax payable |
|
9.3 |
|
|
|
7.5 |
|
Current
portion of long-term debt |
|
18.2 |
|
|
|
17.2 |
|
Operating
lease liabilities |
|
14.9 |
|
|
|
- |
|
Total
current liabilities |
|
347.0 |
|
|
|
337.1 |
|
Long-term
debt, less current portion and net of unaccreted
discount |
|
1,676.6 |
|
|
|
1,690.9 |
|
Deferred
income taxes |
|
399.1 |
|
|
|
393.2 |
|
Pension
liabilities |
|
32.1 |
|
|
|
32.0 |
|
Long-term
taxes payable |
|
4.5 |
|
|
|
5.4 |
|
Other
long-term liabilities |
|
18.5 |
|
|
|
30.4 |
|
Operating
lease liabilities, net of current portion |
|
30.1 |
|
|
|
- |
|
Total stockholders'
equity |
|
1,872.4 |
|
|
|
1,848.2 |
|
Total liabilities, and
stockholders' equity |
$ |
4,380.3 |
|
|
$ |
4,337.2 |
|
|
|
|
|
|
|
|
|
Reconciliation to
operating working capital: |
|
|
|
|
|
|
|
Trade receivables,
net |
|
281.8 |
|
|
|
259.8 |
|
Inventories |
|
241.0 |
|
|
|
231.2 |
|
Accounts payable |
|
(172.3 |
) |
|
|
(175.8 |
) |
Non-GAAP operating
working capital* |
$ |
350.5 |
|
|
$ |
315.2 |
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Income Data: |
Quarter Ended March 31, |
|
|
In Millions of
Dollars |
2019 |
|
|
|
2018 |
|
|
|
(Unaudited) |
|
|
|
(Unaudited) |
|
|
Net sales |
$ |
482.8 |
|
|
|
$ |
240.4 |
|
|
Cost of sales |
|
307.9 |
|
|
|
|
166.2 |
|
|
Gross
profit |
$ |
174.9 |
|
|
|
$ |
74.2 |
|
|
Gross
profit as a percent of net sales |
|
36.2 |
% |
|
|
|
30.9 |
% |
|
Selling, general &
administrative expenses |
|
90.9 |
|
|
|
|
47.1 |
|
|
Research and
development expenses |
|
15.3 |
|
|
|
|
6.5 |
|
|
Restructuring
costs |
|
2.3 |
|
|
|
|
0.9 |
|
|
Income
from operations |
$ |
66.4 |
|
|
|
$ |
19.7 |
|
|
Income
from operations as a percent of net sales |
|
13.8 |
% |
|
|
|
8.2 |
% |
|
Loss on partial
settlement of pension plan |
|
- |
|
|
|
|
5.1 |
|
|
Interest expense,
net |
|
19.8 |
|
|
|
|
1.8 |
|
|
Other non-operating
expense/(income), net |
|
1.1 |
|
|
|
|
(0.1 |
) |
|
Income before income
taxes |
$ |
45.5 |
|
|
|
$ |
12.9 |
|
|
Provision/(Benefit) for
income taxes |
|
10.3 |
|
|
|
|
3.9 |
|
|
Income tax rate |
|
22.6 |
% |
|
|
|
30.3 |
% |
|
Net
income |
|
35.2 |
|
|
|
|
9.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
Basic |
|
64.2 |
|
|
|
|
29.1 |
|
|
Diluted |
|
64.4 |
|
|
|
|
29.2 |
|
|
Net income per
share: |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.55 |
|
|
|
$ |
0.31 |
|
|
Diluted |
$ |
0.55 |
|
|
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Non-GAAP Income From Operations: |
|
|
|
|
|
|
|
|
|
Income
from operations |
$ |
66.4 |
|
|
|
$ |
19.7 |
|
|
Restructuring costs |
|
2.3 |
|
|
|
|
0.9 |
|
|
Acquisition related stock compensation expense |
|
1.1 |
|
|
|
|
- |
|
|
Acquisition related amortization expense |
|
17.8 |
|
|
|
|
2.5 |
|
|
Acquisition related expenses |
|
0.5 |
|
|
|
|
5.4 |
|
|
Non-GAAP
income from operations * |
$ |
88.1 |
|
|
|
$ |
28.5 |
|
|
|
|
18.2 |
% |
|
|
|
11.9 |
% |
|
Reconciliation
of Non-GAAP Net Income: |
` |
|
|
|
|
|
|
|
Net income |
$ |
35.2 |
|
|
|
$ |
9.0 |
|
|
Restructuring
costs |
|
2.3 |
|
|
|
|
0.9 |
|
|
Loss on partial
settlement of pension plan |
|
- |
|
|
|
|
5.1 |
|
|
Acquisition related
stock compensation expense |
|
1.1 |
|
|
|
|
- |
|
|
Acquisition related
amortization expense |
|
17.8 |
|
|
|
|
2.5 |
|
|
Acquisition related
expenses |
|
0.5 |
|
|
|
|
5.4 |
|
|
Tax impact of above
adjustments |
|
(5.2 |
) |
|
|
|
(1.7 |
) |
|
Non-GAAP net income
* |
$ |
51.7 |
|
|
|
$ |
21.2 |
|
|
Non-GAAP diluted
earnings per share * |
$ |
0.80 |
|
(1) |
|
$ |
0.72 |
|
(2) |
|
|
|
|
|
|
|
|
|
|
(1) - tax impact is calculated
by multiplying the estimated effective tax rate for the period of
23.9% by the above items. |
(2) -
tax impact is calculated by multiplying the estimated effective tax
rate for the period of 24.2% by restructuring costs, acquisition
related amortization expense and the loss on settlement of pension
plan. Acquisition related expenses in the quarter are not tax
deductible, therefore the tax impact has been eliminated. |
|
|
|
|
|
|
|
|
|
|
Cash flows from
operating activities |
|
Quarter Ended March 31, |
|
In Millions of
Dollars |
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
35.2 |
|
|
$ |
9.0 |
|
Adjustments to reconcile
net income to net operating cash flows: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
14.3 |
|
|
|
6.9 |
|
Amortization
of intangible assets |
|
|
17.8 |
|
|
|
2.5 |
|
Amortization
of deferred financing costs |
|
|
1.1 |
|
|
|
0.2 |
|
Loss(gain)
on foreign currency, net |
|
|
1.0 |
|
|
|
(0.1 |
) |
Loss on
settlement of pension plan |
|
|
— |
|
|
|
5.1 |
|
Loss on
disposal / impairment of fixed assets |
|
|
0.3 |
|
|
|
0.1 |
|
Stock based
compensation |
|
|
3.5 |
|
|
|
1.3 |
|
Changes in
assets and liabilities: |
|
|
|
|
|
|
|
|
Trade
receivables |
|
|
(22.5 |
) |
|
|
(12.9 |
) |
Inventories |
|
|
(10.6 |
) |
|
|
(0.5 |
) |
Accounts
payable and accrued liabilities |
|
|
(4.9 |
) |
|
|
(5.9 |
) |
Other
current assets and liabilities |
|
|
18.5 |
|
|
|
0.0 |
|
Other
operating assets and liabilities |
|
|
(14.4 |
) |
|
|
(2.0 |
) |
Net cash
provided by operating activities |
|
|
39.3 |
|
|
|
3.7 |
|
Cash flows from
investing activities |
|
|
|
|
|
|
|
|
Purchase of property,
plant and equipment |
|
|
(14.0 |
) |
|
|
(7.0 |
) |
A&S acquisition
purchase price adjustment |
|
|
(13.5 |
) |
|
|
|
|
Proceeds from sale of
building |
|
|
0.3 |
|
|
|
— |
|
Net cash used in investing
activities |
|
|
(27.2 |
) |
|
|
(7.0 |
) |
Cash flows from
financing activities |
|
|
|
|
|
|
|
|
Payments on 2015 Revolving
Credit Facility |
|
|
— |
|
|
|
(4.9 |
) |
Payments on Term Loan
Facility |
|
|
(15.0 |
) |
|
|
— |
|
Dividend payments |
|
|
(11.1 |
) |
|
|
(5.0 |
) |
Borrowing under 2015
Revolving Credit Facility |
|
|
— |
|
|
|
8.0 |
|
Payments of equipment,
working capital notes, mortgages and other debts |
|
|
(0.2 |
) |
|
|
(0.3 |
) |
Proceeds from issuance of
China debt |
|
|
1.2 |
|
|
|
— |
|
Shares surrendered for tax
withholding |
|
|
(2.1 |
) |
|
|
(1.5 |
) |
Net cash
used in financing activities |
|
|
(27.2 |
) |
|
|
(3.7 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
|
(1.5 |
) |
|
|
1.4 |
|
Net change
in cash and cash equivalents |
|
|
(16.6 |
) |
|
|
(5.6 |
) |
Cash and cash equivalents
at beginning of year |
|
|
169.0 |
|
|
|
52.0 |
|
Cash and cash equivalents
at end of period |
|
$ |
152.4 |
|
|
$ |
46.4 |
|
|
|
|
|
|
|
|
|
|
Reconciliation to free
cash flow: |
|
|
|
|
|
|
|
|
Net cash flows from
operating activities |
|
$ |
39.3 |
|
|
$ |
3.7 |
|
Purchase of property,
plant and equipment |
|
|
(14.0 |
) |
|
|
(7.0 |
) |
Free cash flow * |
|
$ |
25.3 |
|
|
$ |
(3.3 |
) |
|
|
|
|
|
|
|
|
|
Selected Segment Data |
|
Quarter Ended March 31,March
31, |
|
In Millions of Dollars |
|
2019 |
|
|
2018 |
|
Net
Sales: |
|
|
|
|
|
|
|
|
Power Transmission
Technologies |
|
$ |
234.9 |
|
|
$ |
240.4 |
|
Automation &
Specialty |
|
|
249.1 |
|
|
|
- |
|
Inter-segment
eliminations |
|
|
(1.2 |
) |
|
|
- |
|
Total |
|
$ |
482.8 |
|
|
$ |
240.4 |
|
|
|
|
|
|
|
|
|
|
Income from
operations: |
|
|
|
|
|
|
|
|
Power Transmission
Technologies |
|
$ |
28.9 |
|
|
$ |
28.2 |
|
Automation &
Specialty |
|
|
40.6 |
|
|
|
- |
|
Corporate |
|
|
(0.8 |
) |
|
|
(7.6 |
) |
Restructuring costs |
|
|
(2.3 |
) |
|
|
(0.9 |
) |
Total |
|
$ |
66.4 |
|
|
$ |
19.7 |
|
|
|
|
|
|
|
|
|
|
*Reconciliation of Non-GAAP Income from Operations by
Segment:
Selected Segment Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Millions of Dollars |
|
Quarter Ended March 31, 2019 |
|
|
|
PowerTransmissionTechnologies |
|
|
Automation andSpecialty |
|
|
Corporate |
|
|
Total |
|
Income from
operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations |
|
$ |
27.8 |
|
|
$ |
39.4 |
|
|
$ |
(0.8 |
) |
|
$ |
66.4 |
|
Restructuring costs |
|
|
1.1 |
|
|
|
1.2 |
|
|
|
- |
|
|
|
2.3 |
|
Acquisition related stock compensation expense |
|
|
- |
|
|
|
- |
|
|
|
1.1 |
|
|
|
1.1 |
|
Acquisition related amortization expense |
|
|
2.3 |
|
|
|
15.5 |
|
|
|
- |
|
|
|
17.8 |
|
Acquisition related expenses |
|
|
- |
|
|
|
- |
|
|
|
0.5 |
|
|
|
0.5 |
|
Total Non-GAAP
Income from operations |
|
$ |
31.2 |
|
|
$ |
56.1 |
|
|
$ |
0.8 |
|
|
$ |
88.1 |
|
Non-GAAP Income from
operations as a percentage of Segment net sales* |
|
|
13.3 |
% |
|
|
22.5 |
% |
|
|
|
|
|
|
18.2 |
% |
* 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 SalesOrganic 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 and Non-GAAP operating income
marginNon-GAAP net income, non-GAAP income from operations and
non-GAAP diluted earnings per share exclude acquisition related
amortization, acquisition related costs, restructuring costs 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 EBITDAAdjusted EBITDA represents earnings
before interest, taxes, depreciation, amortization, acquisition
related costs, restructuring costs, stock-based compensation and
other income or charges that management does not consider to be
directly related to the Company’s core operating
performance.
Non-GAAP Free cash flowNon-GAAP free cash flow is calculated by
deducting purchases of property, plant and equipment from net cash
flows from operating activities.
Non-GAAP operating working capitalNon-GAAP operating working
capital is calculated by deducting accounts payable from net trade
receivables plus inventories.
Net DebtNet 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,” our
expectations regarding our tax rate, our expectations regarding the
integration of the A&S businesses and the impact of such
acquisition on our business, including our expectations regarding
achieving anticipated synergies, our expectations regarding
delevering our business and our ability to delever our business,
our expectations regarding growth opportunities and our ability to
drive growth, changes in how we calculate certain non-GAAP
measures, expectations regarding improvements in the macro economic
environment and outlooks in China and Germany, our expectations
regarding our ability to serve our customers and deliver value for
our shareholders, our expectations regarding continued sales,
earnings and free cash flow growth in 2019 and the Company’s
guidance for full year 2019.
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
intangibles assets, (17) failure of operating equipment or
information technology infrastructure, (18) risks associated with
our debt leverage, (19) risks associated with restrictions
contained in the agreements governing the Notes and the Altra
Credit Facilities, (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 ERP 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 proposed 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 maintain 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 vote to leave 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, and (36) 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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