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Altra Holdings, Inc. (AIMC), a leading global supplier of electromechanical power transmission and motion control products, today announced unaudited financial results for the second quarter ended June 30, 2012.
Financial Highlights
-- Second-quarter net sales increased 14% to $187.9 million compared with
$165.4 million in the prior-year quarter. This represents 3% growth,
excluding acquisitions.
-- Second-quarter income from operations increased 11.0% to $21.2 million
from $19.1 million in the second quarter of 2011.
-- Second-quarter net income increased 19.1% to $10.6 million, or $0.40 per
diluted share, from $8.9 million, or $0.34 per diluted share, in the
second quarter of 2011. Second-quarter 2012 net income includes $0.2
million in acquisition-related costs and $0.6 million of expense related
to the planned July redemption of debt, partially offset by the $0.3
million tax effect of those items. Second-quarter of 2011 net income
included $0.9 million in acquisition-related costs and $0.6 million of
expense related to inventory fair value adjustment from acquisitions,
partially offset by the $0.5 million tax effect of those items.
Excluding these items in both periods, non-GAAP net income increased
12.0% to $11.2 million, or $0.42 per diluted share.*
-- The company recorded a lower tax rate of 21.2% primarily due to the
reversal of a reserve related to an income tax settlement with the state
of New York for which the company was indemnified. This tax benefit was
entirely offset by a related $0.9 million expense recorded in Other
Non-Operating Expense.
-- Cash and cash equivalents were $95.2 million at June 30, 2012 compared
with $92.5 million at December 31, 2011.
Management Comments
"During the quarter, we performed well operationally and achieved several milestone events," said Carl Christenson, President and CEO. "We grew revenue by 14%, including 3% growth excluding acquisitions, while increasing operating income by 11%. We also initiated our first-ever quarterly dividend and earlier this week announced our second quarterly dividend. We also announced our intention to partially redeem Altra’s 8.125% Notes. We generated $24.3 million in operating cash flow for the first half of the year as a result of strong working capital performance. We are also very excited about our recently announced acquisition of Brazil-based Lamiflex as part of our plan to acquire assets in key strategic regions that offer significant long-term growth profiles."
Business Outlook
"We are experiencing continuing strength across many of our end markets in North America and Asia and continue to take share by developing new products that are in direct alignment with customers’ needs," said Christenson. "At the same time, as a result of the continued weakness in Europe we have accelerated our cost reduction and profit improvement plan across our European operations. We continue to expect to report year-over-year sales and profitability growth for full year 2012, but given the current economic conditions and uncertainty in Europe, and the expected negative effect of foreign currency translation on our revenue, we are revising our guidance for the remainder of the year."
The Company currently is forecasting sales in the range of $720 to $735 million and non-GAAP adjusted diluted EPS of $1.35 to $1.45 for 2012. Altra expects its tax rate for the full year to be approximately 32.0%, before discrete items, capital expenditures in the range of $30 to $35 million, and depreciation and amortization in the range of $25 to $28 million.
The Company will host an investor conference call to discuss its unaudited second-quarter financial results today, July 27, 2012, at 9:00 AM ET. The public is invited to listen to the conference call by dialing (877) 407-8293 domestically or (201) 689-8349 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 "Events & 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 July 27, through midnight on August 3, 2012. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (dial account #364 then replay ID # 397796). A webcast replay also will be available at www.altramotion.com.
Altra Holdings, Inc.
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Consolidated Statements of Income
Data: Quarter Ended Year to Date Ended
In Thousands of Dollars, except per June 30, July 2, June 30, July 2,
share amounts 2012 2011 2012 2011
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net sales $ 187,943 $ 165,395 $ 380,328 $ 325,242
Cost of sales 131,941 116,985 267,653 228,997
----------- ----------- ----------- -----------
Gross profit $ 56,002 $ 48,410 $ 112,675 $ 96,245
Gross profit as a percent of net
sales 29.8% 29.3% 29.6% 29.6%
Selling, general & administrative
expenses 31,884 26,912 63,881 52,428
Research and development expenses 2,942 2,426 5,969 4,743
----------- ----------- ----------- -----------
Income from operations $ 21,176 $ 19,072 $ 42,825 $ 39,074
Income from operations as a
percent of net sales 11.3% 11.5% 11.3% 12.0%
Interest expense, net 6,504 6,153 12,278 11,316
Other non-operating expense
(income), net 1,207 (599) 1,432 (885)
----------- ----------- ----------- -----------
Income before income taxes $ 13,465 $ 13,518 $ 29,115 $ 28,643
Provision for income taxes 2,856 4,600 7,990 9,003
----------- ----------- ----------- -----------
Income tax rate 21.2% 34.0% 27.4% 31.4%
----------- ----------- ----------- -----------
Net income $ 10,609 $ 8,918 $ 21,125 $ 19,640
=========== =========== =========== ===========
Weighted Average common shares
outstanding
Basic 26,606 26,491 26,541 26,491
Diluted 26,664 26,613 26,674 26,657
Net income per share
Basic 0.40 0.34 0.80 0.74
Diluted $ 0.40 $ 0.34 $ 0.79 $ 0.74
Reconciliation of Non-GAAP Adjusted
Income From Operations:
Income from operations $ 21,176 $ 19,072 $ 42,825 $ 39,074
Amortization of inventory fair
value adjustment -- 581 -- 581
Acquisition related expenses 201 941 391 2,087
----------- ----------- ----------- -----------
Non-GAAP adjusted income from
operations $ 21,377 $ 20,594 $ 43,216 $ 41,742
=========== =========== =========== ===========
Reconciliation of Non-GAAP Adjusted
Net Income:
Net income $ 10,609 $ 8,918 $ 21,125 $ 19,640
Amortization of inventory fair
value adjustment -- 581 -- 581
Acquisition related expenses 201 941 391 2,087
Premium accrued on the debt to be
redeemed 630 -- 630 --
Tax impact of above adjustments (266) (457) (326) (827)
Tax benefit from discrete items -- -- -- (590)
----------- ----------- ----------- -----------
Non-GAAP adjusted net income $ 11,174 $ 9,983 $ 21,820 $ 20,891
=========== =========== =========== ===========
Non-GAAP adjusted diluted earnings
per share $ 0.42 $ 0.38 $ 0.82 $ 0.79
=========== (1) =========== (2) =========== (3) =========== (4)
(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 32.0% by the
above items
(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 30.0% by the
above items
(3) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.9% by the
above items
(4) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.0% by the
above items
Consolidated Balance Sheets
June 30, December
In Thousands of Dollars 2012 31, 2011
(unaudited)
Assets:
Current Assets
Cash and cash equivalents 95,235 92,515
Trade Receivables, net 101,823 91,859
Inventories 120,973 125,970
Deferred income taxes 5,849 5,856
Income tax receivable 4,222 7,299
Prepaid expenses and
other current assets 7,376 7,141
----------- ----------
Total current assets 335,478 330,640
Property, plant and
equipment, net 129,835 123,464
Intangible assets, net 73,328 77,108
Goodwill 83,257 83,799
Deferred income taxes 1,557 1,614
Other non-current assets,
net 9,347 13,360
----------- ----------
Total assets $ 632,802 $ 629,985
=========== ==========
Liabilities and
stockholders’ equity
Current liabilities
Accounts payable 43,184 52,768
Accrued payroll 18,593 19,734
Accruals and other
current liabilities 32,743 28,798
Deferred income taxes 116 118
Current portion of
long-term debt 21,475 688
----------- ----------
Total current liabilities 116,111 102,106
Long-term debt, less
current portion and net
of unaccreted discount 240,194 263,361
Deferred income taxes 36,157 35,798
Pension liabilities 11,923 12,896
Other post retirement
benefits 260 296
Long-term taxes payable 1,288 6,227
Other long-term
liabilities 674 905
----------- ----------
Total stockholders’ equity 226,195 208,396
----------- ----------
Total liabilities and
stockholders’ equity $ 632,802 $ 629,985
=========== ==========
Year to Date Ended
------------------------
June 30, July 2,
2012 2012
----------- -----------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net income $ 21,125 $ 19,640
Adjustments to reconcile net income to net
cash flows:
Depreciation 9,962 8,420
Amortization of intangible assets 3,321 2,863
Amortization of deferred financing costs 666 784
Loss (gain) on foreign currency, net 340 (158)
Accretion of debt discount, net 1,588 1,045
Stock based compensation 1,543 1,374
Changes in assets and liabilities:
Trade receivables (13,198) (22,275)
Inventories 4,179 (8,318)
Accounts payable and accrued liabilities (2,751) 6,301
Other current assets and liabilities 170 (625)
Other operating assets and liabilities (2,646) (1,896)
----------- -----------
Net cash used in operating activities 24,299 7,155
----------- -----------
Cash flows from investing activities
Purchase of property, plant and equipment (16,906) (8,898)
Proceeds from sale of Chattanooga Facility -- 1,484
Acquisition of Bauer, net of $41 cash
received -- (62,291)
----------- -----------
Net cash used in investing activities (16,906) (69,705)
----------- -----------
Cash flows from financing activities
Payment of debt issuance costs -- (3,414)
Proceeds from issuance of Convertible Notes -- 85,000
Redemption of Variable Rate Demand Revenue
Bonds related to the San Marcos facility (3,000) --
Redemption of Variable Rate Demand Revenue
Bonds related to the Chattanooga facility -- (2,290)
Shares surrendered for tax withholdings (57) (65)
Payment on mortgages (678) (197)
Payments on capital leases (228) (400)
----------- -----------
Net cash (used in) provided by financing
activities (3,963) 78,634
----------- -----------
Effect of exchange rate changes on cash and
cash equivalents (710) 1,680
----------- -----------
Net change in cash and cash equivalents 2,720 17,764
Cash and cash equivalents at beginning of
year 92,515 72,723
----------- -----------
Cash and cash equivalents at end of period $ 95,235 $ 90,487
=========== ===========
Reconciliation to free cash flow:
Net cash used in operating activities 24,299 7,155
Purchase of property, plant and equipment (16,906) (8,898)
----------- -----------
Free cash flow $ 7,393 $ (1,743)
=========== ===========
About Altra Holdings
Altra Holdings, Inc., through its wholly-owned subsidiary Altra Industrial Motion, Inc., is a leading multinational designer, producer and marketer of a wide range of electromechanical power transmission and motion control products. The company brings together strong brands covering over 40 product lines with production facilities in nine countries and sales coverage in over 70 countries. Our leading brands include Boston Gear, Warner Electric, TB Wood’s, Formsprag Clutch, Ameridrives Couplings, Industrial Clutch, Kilian Manufacturing, Marland Clutch, Nuttall Gear, Stieber Clutch, Wichita Clutch, Twiflex Limited, Bibby Transmissions, Matrix International, Inertia Dynamics, Huco Dynatork, Warner Linear, Bauer Gear Motor and Lamiflex.
The Altra Holdings, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4038
* Discussion of Non-GAAP Financial Measures
As used in this release and the accompanying slides posted on the Company’s website, non-GAAP adjusted diluted earnings per share, non-GAAP adjusted income from operations and non-GAAP adjusted net income are each calculated using either net income or income from operations that excludes acquisition related costs, discrete tax items, amortization of inventory fair value adjustment, premium paid on the redemption of debt and other income or charges that management does not consider to be directly related to the Company’s core operating performance. Non-GAAP adjusted diluted earnings per share is calculated by dividing non-GAAP adjusted net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from new cash provided by operating activities.
Altra believes that the presentation of non-GAAP adjusted net income, non-GAAP adjusted income from operations, non-GAAP adjusted diluted earnings per share and non-GAAP free cash flow provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations.
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 Company’s position regarding strength in its end markets and its taking of share from new products, the acceleration of cost reductions and profit improvement plans across its European operations, the Company’s expectations regarding year-over-year sales and profitability growth, the Company’s plan to acquire assets in key strategic regions that offer significant long-term growth profiles, the Company’s intention to partially redeem Altra’s 8.125% Notes, the negative effect of foreign currency translation on its revenue and the Company’s guidance for 2012 for sales, EPS, capital expenditures, depreciation and amortization, and tax rate.
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 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, (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) changes in pension and retirement liabilities, (14) risks associated with compliance with environmental laws, (15) the ability to successfully execute, manage and integrate key acquisitions and mergers, (16) failure to obtain or protect intellectual property rights, (17) risks associated with impairment of goodwill or intangibles assets, (18) failure of operating equipment or information technology infrastructure, (19) risks associated with our debt leverage and operating covenants under our debt instruments, (20) risks associated with restrictions contained in our Senior Secured Notes and Convertible Notes, (21) risks associated with compliance with tax laws, (22) risks associated with the global recession and volatility and disruption in the global financial markets, (23) risks associated with implementation of our new ERP system, (24) risks associated with the Bauer acquisition and integration, (25) risks associated with the Company’s planned investment in a new manufacturing facility in China, and (26) 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 Holdings, Inc. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise. AIMC-E
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Altra Holdings, Inc.
(Logo: http://media.primezone.com/cache/8949/int/4495.jpg)
CONTACT: Altra Holdings, Inc.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com
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