- Revenue grew 9% to $103.5 million over the prior-year period,
driven by strong recovery in Industrial markets
- Gross margin expanded 120 basis points to 30.9% year-over-year
and 20 basis points sequentially on higher volume, strategic
pricing and improved mix
- Achieved net income of $6.0 million, or $0.41 per diluted
share, up 49%
- Record orders of $119.9 million drove a book-to-bill ratio of
1.2x
- Record backlog of $185.6 million, up 9% sequentially
Allied Motion Technologies Inc. (Nasdaq: AMOT) (“Allied Motion”
or “Company”), a designer and manufacturer of precision and
specialty controlled motion products and solutions for the global
market, today reported financial results for its third quarter
ended September 30, 2021. All share and per share information
reflect the April 30, 2021 3-for-2 stock dividend.
“Our results reflect continued strength in most of our served
markets, particularly within our broad-based Industrial vertical.
We had strong demand for products and solutions tied to industrial
automation, vehicle handling, and the oil & gas sector,”
commented Dick Warzala, Chairman and CEO. “Navigating the current
environment has continued to be a challenge given ongoing
inflationary pressures, global supply chain disruptions and labor
shortages. While we do not see these challenges abating in the
near-term, we are adeptly managing the situation in cooperation
with our suppliers and customers. We have implemented actions
within our control to mitigate the impact which we believe is
evident by our measurable expansion in margins and profitability
during the quarter.
“As we look out, demand remains strong and most customers will
accept all product that we can deliver. While we expect some
seasonality in the fourth quarter given typical holiday shutdowns
and inventory adjustments, our current backlog indicates that the
“normal” dip in revenues could be less than what we’ve experienced
in prior years. Ultimately, we remain confident in our strategy and
have a positive outlook for our business over the long term.”
Third Quarter 2021 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue increased 9% to $103.5 million, driven by strong demand
in the Industrial and Vehicle markets. The Industrial markets
benefitted from continued economic recovery in a number of
industries, which resulted in 39% growth. Recovery within the
construction and agriculture industries combined with strong
execution by our team drove 5% growth within the Vehicle markets.
Excluding the favorable impact of foreign currency exchange rate
fluctuations on revenue of $0.8 million, revenue was up 8.5%. Sales
to U.S. customers were 56% of total sales, unchanged from the same
period last year, with the balance of sales to customers primarily
in Europe, Canada and Asia-Pacific. See the attached table for a
description of non-GAAP financial measures and reconciliation of
revenue excluding foreign currency exchange rate fluctuations.
Gross margin was 30.9%, up 120 basis points from the third
quarter of 2020, and up 20 basis points from the sequential 2021
second quarter. The increases were largely attributable to strong
volume, strategic pricing and improved mix, partially offset by
global supply chain challenges and rising material and labor
costs.
Operating costs and expenses as a percent of revenue were 22.6%,
down 30 basis points. Operating income was $8.7 million, or 8.4% of
sales, up from $6.5 million, or 6.8%, in the third quarter of 2020.
Higher volume drove operating leverage, which more than offset
increased incentive compensation, which was aligned with the
revenue and net income growth.
Net income was $6.0 million, or $0.41 per diluted share, up from
$4.0 million, or $0.28 per diluted share in the third quarter of
2020. The effective tax rate was 24.6% compared with 25.4% in the
prior-year period. The lower tax rate was aided by our continued
tax planning initiatives. The Company expects its income tax rate
for the fourth quarter of 2021 to be approximately 25%. Excluding
the discrete tax benefit of $7.4 million recorded in the first
quarter of 2021, the Company expects its full year 2021 income tax
rate to be approximately 24%.
Earnings before interest, taxes, depreciation, amortization,
stock-based compensation expense, business development costs, and
foreign currency gains/losses (“Adjusted EBITDA”) was $14.5
million, up $3.0 million, or 26%. As a percent of sales, Adjusted
EBITDA was 14.0%, up 190 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.
Year-to-Date (YTD) 2021 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue of $306.7 million increased $33.0 million, or 12%,
reflecting strong demand in Vehicle and Industrial markets as
economic conditions continued to recover from the impact of the
COVID-19 pandemic. The impact of FX fluctuations was favorable $9.2
million for the year-to-date period. Sales to U.S. customers were
54% 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-Pacific.
Gross margin was 30.4% compared with 30.2% in the
prior-year-period. The margin improvement reflects strong demand
and improved mix, partially offset by increased costs given global
supply chain disruptions and the proactive decision to incur
incremental costs to ensure on-time deliveries to customers.
Operating costs and expenses as a percent of revenue were 23.2%,
down 30 basis points. Operating income was $22.0 million, up from
$18.2 million. Operating margin improved 50 basis points to
7.2%.
Net income was $22.5 million, or $1.56 per diluted share,
compared with $10.9 million, or $0.76 per diluted share. The
increase reflects a net discrete tax benefit of $7.4 million
recorded in the first quarter of 2021 relating to new legislation
enacted in New Zealand. Excluding the discrete tax benefit,
business development costs and foreign currency gains/losses,
adjusted net income was $15.3 million, or $1.06 per diluted share,
compared with $11.6 million, or $0.81 per diluted share, in the
comparable period of 2020. Adjusted EBITDA increased to $38.8
million from $33.2 million. Adjusted EBITDA margin of 12.7% was up
60 basis points. See the attached tables for a description of
non-GAAP financial measures and reconciliation table for Adjusted
Net Income and Diluted Earnings per Share and Adjusted EBITDA.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $19.2 million compared with $23.1
million at year-end 2020. Year-to-date net cash provided by
operations was $19.9 million and was primarily used to fund capital
expenditures of $9.8 million and net debt repayment of $10.6
million. The capital investments were largely focused on new
customer projects and ERP implementations. The Company expects 2021
capital expenditures to be approximately $12 million to $15
million.
Total debt was $109.3 million compared with $120.1 million at
year-end 2020. With cash of $19.2 million, debt, net of cash, was
$90.1 million, or 35.7% of net debt to capitalization. The
Company’s leverage ratio, as defined in its credit agreement, was
2.22x at quarter-end.
Orders and Backlog Summary ($ in thousands)
Q3
2021
Q2
2021
Q1
2021
Q4
2020
Q3
2020
Orders
$
119,940
$
118,974
$
114,644
$
108,466
$
88,958
Backlog
$
185,561
$
170,364
$
152,262
$
141,344
$
123,700
Orders of $119.9 million reached a record level, increasing 35%
over the 2020 third quarter and 1% sequentially. Foreign currency
translation had a favorable $1.0 million impact on third quarter
orders compared with the prior-year period. Backlog increased 9%
over the sequential second quarter and 50% over the prior-year
period to a record $185.6 million. The time to convert the majority
of backlog to sales is approximately three to nine months.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
November 4, 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, November 11, 2021. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
13723716 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-Pacific.
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
November 4, 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 nine months
ended
September 30,
September 30,
2021
2020
2021
2020
Revenues
$
103,509
$
94,653
$
306,723
$
273,696
Cost of goods sold
71,488
66,513
213,417
191,054
Gross profit
32,021
28,140
93,306
82,642
Operating costs and expenses:
Selling
4,365
3,734
12,979
11,819
General and administrative
10,620
10,008
32,549
28,880
Engineering and development
6,768
6,434
20,967
18,865
Business development
94
8
268
432
Amortization of intangible assets
1,504
1,499
4,527
4,423
Total operating costs and expenses
23,351
21,683
71,290
64,419
Operating income
8,670
6,457
22,016
18,223
Other expense, net:
Interest expense
777
844
2,445
2,799
Other (income) expense, net
(29)
231
(158)
307
Total other expense, net
748
1,075
2,287
3,106
Income before income taxes
7,922
5,382
19,729
15,117
Income tax (provision) benefit
(1,950)
(1,369)
2,804
(4,173)
Net income
$
5,972
$
4,013
$
22,533
$
10,944
Basic earnings per share:
Earnings per share
$
0.41
$
0.28
$
1.57
$
0.77
Basic weighted average common shares
14,411
14,271
14,375
14,231
Diluted earnings per share:
Earnings per share
$
0.41
$
0.28
$
1.56
$
0.76
Diluted weighted average common shares
14,502
14,369
14,478
14,309
ALLIED MOTION TECHNOLOGIES
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
(Unaudited)
September 30,
December 31,
2021
2020
Assets
Current assets:
Cash and cash equivalents
$
19,209
$
23,131
Trade receivables, net of provision for
credit losses of $545 and $382 at September 30, 2021 and December
31, 2020, respectively
55,723
47,377
Inventories
72,239
62,978
Prepaid expenses and other assets
10,365
8,728
Total current assets
157,536
142,214
Property, plant and equipment, net
55,215
55,428
Deferred income taxes
7,188
330
Intangible assets, net
60,643
65,859
Goodwill
60,583
61,860
Right of use assets
17,104
19,023
Other long-term assets
5,341
4,483
Total Assets
$
363,610
$
349,197
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
35,131
$
27,668
Accrued liabilities
27,315
24,862
Total current liabilities
62,446
52,530
Long-term debt
109,312
120,079
Deferred income taxes
4,230
4,659
Pension and post-retirement
obligations
5,139
5,340
Right of use liabilities
13,126
14,975
Other long-term liabilities
6,945
8,558
Total liabilities
201,198
206,141
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 14,715 and 14,632 shares issued and outstanding at
September 30, 2021 and December 31, 2020, respectively
43,792
41,278
Preferred stock, par value $1.00 per
share, authorized 5,000 shares; no shares issued or outstanding
—
—
Retained earnings
126,568
105,065
Accumulated other comprehensive loss
(7,948)
(3,287)
Total stockholders’ equity
162,412
143,056
Total Liabilities and Stockholders’
Equity
$
363,610
$
349,197
ALLIED MOTION TECHNOLOGIES
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the nine months
ended
September 30,
2021
2020
Cash Flows From Operating
Activities:
Net income
$
22,533
$
10,944
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization
13,317
11,682
Deferred income taxes
(7,440)
(931)
Stock-based compensation expense
3,100
2,640
Debt issue cost amortization recorded in
interest expense
106
109
Other
1,235
360
Changes in operating assets and
liabilities, net of acquisition:
Trade receivables
(9,586)
(2,136)
Inventories
(11,747)
(4,575)
Prepaid expenses and other assets
(675)
(725)
Accounts payable
8,168
492
Accrued liabilities
909
(2,840)
Net cash provided by operating
activities
19,920
15,020
Cash Flows From Investing
Activities:
Purchase of property and equipment
(9,761)
(6,560)
Consideration paid for acquisitions, net
of cash acquired
—
(14,728)
Net cash used in investing activities
(9,761)
(21,288)
Cash Flows From Financing
Activities:
Borrowings on long term debt
819
26,979
Principal payments of long-term debt
(11,417)
(12,299)
Payment of debt issuance costs
—
(401)
Dividends paid to stockholders
(1,007)
(875)
Tax withholdings related to net share
settlements of restricted stock
(1,700)
(814)
Net cash (used in) provided by financing
activities
(13,305)
12,590
Effect of foreign exchange rate changes on
cash
(776)
489
Net (decrease) increase in cash and cash
equivalents
(3,922)
6,811
Cash and cash equivalents at beginning of
period
23,131
13,416
Cash and cash equivalents at end of
period
$
19,209
$
20,227
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, and foreign
currency gains/losses), 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 nine months ended September 30,
2021 is as follows:
Three Months Ended
Nine Months Ended
September 30, 2021
September 30, 2021
Revenue as reported
$
103,509
$
306,723
Currency impact
(813)
(9,191)
Revenue excluding foreign currency
exchange impacts
$
102,696
$
297,532
The Company’s calculation of Adjusted EBITDA for the three and
nine months ended September 30, 2021 and 2020 is as follows:
Three Months Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Net income
$
5,972
$
4,013
$
22,533
$
10,944
Interest expense
777
844
2,445
2,799
Provision (benefit) for income tax
1,950
1,369
(2,804)
4,173
Depreciation and amortization
4,427
4,055
13,317
11,682
EBITDA
13,126
10,281
35,491
29,598
Stock compensation expense
1,303
920
3,100
2,640
Foreign currency (gain) loss
(69)
283
(42)
493
Business development costs
94
8
268
432
Adjusted EBITDA
$
14,454
$
11,492
$
38,817
$
33,163
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 nine months ended
September 30, 2021 and 2020 is as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
Per diluted share
2020
Per diluted share
2021
Per diluted share
2020
Per diluted share
Net income as reported
$
5,972
$
0.41
$
4,013
$
0.28
$
22,533
$
1.56
$
10,944
$
0.76
Non-GAAP adjustments, net of tax
Discrete income tax benefit
-
-
-
-
(7,373)
(0.51)
-
-
Foreign currency (gain) loss
(50)
-
211
0.01
(30)
-
357
0.02
Business development costs
72
-
6
-
205
0.01
313
0.02
Adjusted net income and diluted EPS
$
5,994
$
0.41
$
4,230
$
0.29
$
15,335
$
1.06
$
11,614
$
0.81
Weighted average diluted shares
outstanding
14,502
14,369
14,478
14,309
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/20211103006233/en/
Investor Contact: Deborah K. Pawlowski Kei Advisors LLC
Phone: 716-843-3908 Email: dpawlowski@keiadvisors.com
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