Altra Industrial Motion
Aug 4, 2008

Altra Holdings Announces Record Financial Results for the Second Quarter of 2008

Raises Guidance for 2008

QUINCY, Mass., Aug 4, 2008 (PrimeNewswire via COMTEX News Network) -- Altra Holdings, Inc. (Nasdaq:AIMC), a leading global supplier of clutch brakes, couplings, gearing, belted drives and power transmission components, today announced unaudited financial results for the second quarter of 2008.

Financial Highlights



    * Quarterly net sales increased 9.4% year-over-year to a record
      $167.9 million.  Adjusted for acquisitions, sales grew 7.3% for
      the second quarter of 2008.

    * Recurring diluted EPS from continuing operations was $0.39 for
      the second quarter compared with $0.29 in the prior-year
      quarter, an increase of 34.5% (GAAP diluted EPS from continuing
      operations was $0.38).

    * Income from operations reached 13.1% of net sales, an
      improvement of 150 basis points.

    * Improved leverage to 2.35x, net-debt to adjusted EBITDA.

    * Raised financial guidance for 2008.

Comments on the Second Quarter

"We are extremely pleased to deliver another quarter of record financial results to our shareholders," said Michael L. Hurt, Chairman and CEO. "Our impressive second quarter growth was driven by strong sales to our global OEM's, target market successes and continued strong demand from most of our end markets. Both, our record operating margin and record recurring income from continuing operations for the quarter were the result of sales leverage coupled with low-cost country sourcing, productivity improvements, and our ability to pass through material cost increases. Additionally, we continued to strengthen our balance sheet by repurchasing $15 million worth of our 9% Senior Secured notes and improving our leverage ratio to 2.35x (net debt to adjusted EBITDA)."

Financial Results

Net sales for the second quarter of 2008 increased 9.4% to a record $167.9 million from $153.5 million in the second quarter of 2007. The growth rate, adjusted for acquisitions, was 7.3% for the quarter. Net sales for the six months ended June 28, 2008 increased 15.7% to $331.1 million from $286.2 million for the first six months of 2007. The growth rate adjusted for acquisitions for the first half of the year was 6.0%.

Income from operations for the second quarter of 2008 increased 23.6% to $22.0 million from $17.8 million in the second quarter of 2007. Excluding restructuring charges and OPEB curtailment gain, income from operations for the second quarter of 2008 was $22.2 million, or 13.2% of sales. Income from operations for the first six months increased 29.5% to $42.6 million from $32.9 million in the first six months of 2007. Excluding restructuring charges and OPEB curtailment gain, income from operations for the first six months of 2008 was $43.5 million, or 13.2% of sales.

Reported net income for the second quarter was $9.9 million, or $0.38 per diluted share, compared with $4.8 million, or $0.21 per diluted share, for the second quarter of 2007. Reported net income for the six-month period of 2008 was $18.4 million, or $0.71 per diluted share, compared with $8.6 million, or $0.37 per diluted share, for the six-month period of 2007.

Recurring diluted earnings per share from continuing operations for the second quarter of 2008 grew to $0.39 per diluted share from $0.29 per diluted share in the second quarter of 2007. Recurring diluted earnings per share from continuing operations for the first half of 2008 grew to $0.76 per diluted share from $0.58 per diluted share in the first half of 2007.

Business Outlook

"As we head into the second half of the year, we are optimistic about our performance for the remainder of 2008," said Hurt. "Currently, we continue to see solid bookings and our sales and marketing teams are successfully closing new business opportunities. We expect that demand across our diversified end markets, including aerospace and defense, metals, mining and power generation, should help to sustain our momentum in the second half of the year. As a result, we are raising 2008 full-year guidance."

For 2008, the company is forecasting net sales to be in the range of $640 million to $650 million, EBITDA to be in the range of $102 to $106 million, and diluted earnings per share in the range of $1.28 to $1.37. Altra Holdings expects capital expenditures in the range of $17.0 to $19.0 million, depreciation and amortization in the range of $21.0 to $23.0 million and a tax rate of approximately 35.0%.



                Altra Holdings, Inc.

                                            (Unaudited)
                               ------------------   ------------------
 Condensed Statements of
  Income Data:                   Quarter Ended      Year to Date Ended
 In Thousands of Dollars,      June 28,  June 30,   June 28,  June 30,
  except per share amounts       2008      2007       2008      2007
                               --------  --------   --------  --------

 Net sales                     $167,893  $153,528   $331,075  $286,234
 Cost of sales                  117,506   110,411    232,890   205,069
                               --------  --------   --------  --------
   Gross profit                $ 50,387  $ 43,117   $ 98,185  $ 81,165
   Gross profit as a percent
    of net sales                  30.0%     28.1%      29.7%     28.4%
 Selling, general &
  administrative expenses        26,448    23,578     51,161    44,405
 Research and development
  expenses                        1,766     1,565      3,497     2,859
 OPEB curtailment gain             (169)       --       (169)       --
 Restructuring expense              335       198      1,068       991
                               --------  --------   --------  --------
   Income from operations      $ 22,007  $ 17,776   $ 42,628  $ 32,910
   Income from operations as
    a percent of net sales        13.1%     11.6%      12.9%     11.5%
 Interest expense, net            7,713    10,726     15,154    19,874
 Other income                     (853)       131    (1,479)        84
                               --------  --------   --------  --------
   Income from continuing
    operations before income
    taxes                      $ 15,147  $  6,919   $ 28,953  $ 12,952
 Income taxes                     5,278     2,583     10,127     4,848
                               --------  --------   --------  --------
 Income tax rate                  34.8%     37.3%      35.0%     37.4%
   Net income from continuing
    operations                    9,869     4,336     18,826     8,104
 Net loss from discontinued
  operations, net of taxes of
  $124 for 2008 and $220
  for 2007                           --       466       (397)      466
                               --------  --------   --------  --------
     Net income                $  9,869  $  4,802   $ 18,429  $  8,570
                               ========  ========   ========  ========

 Weighted Average common
  shares outstanding
   Basic                         25,476    22,250     25,474    22,066
   Diluted                       26,121    23,268     26,120    23,075

 Earnings per share - Basic
   Net income from continuing
   operations                  $   0.39  $   0.20   $   0.74  $   0.37
   Net income (loss) from
    discontinued operations          --      0.02      (0.02)     0.02
                               --------  --------   --------  --------
     Net income                $   0.39  $   0.22   $   0.72  $   0.39

 Earnings per share - Diluted
   Net income from continuing
    operations                 $   0.38  $   0.19   $   0.72  $   0.35
   Net income (loss) from
    discontinued operations          --      0.02      (0.01)     0.02
                               --------  --------   --------  --------
     Net income                $   0.38  $   0.21   $   0.71  $   0.37

 Other Financial Data:
   Depreciation & amortization    5,395     6,067     10,935    10,532
   Capital expenditures           3,147     3,215      7,641     4,249

 Reconciliation of Recurring
  Net Income:

   Net income from continuing
    operations                 $  9,869  $  4,336   $ 18,826  $  8,104

   Restructuring charges,
    net of tax                      218       124        694       620
   Premium & deferred financing
    expense eliminated on
    redeemed 11.25% bonds,
    net of tax                       --     1,520         75     3,895
   Premium & deferred financing
    expense eliminated on
    redeemed 9% bonds,
    net of tax                      432        --        431        --
   OPEB curtailment gain
    related to restructuring
    activities, net of tax         (110)       --       (110)       --
   Gain on the sale of
    securities, net of tax         (141)       --       (140)       --
   Amortization of inventory
    fair value adjustment,
    net of tax                       --       409         --       409
   Accelerated vesting for
    stock compensation
    (for ex director),
    net of tax                       --       180         --       180
   Bridge financing fee on TB
    Woods acquisition, net
    of tax                           --       282         --       282
   Deferred financing expense
    eliminated on pay down of
     TB Wood's revolving credit
     facility, net of tax            --        --        100        --
                               --------  --------   --------  --------
      Recurring net income     $ 10,268  $  6,851   $ 19,876  $ 13,490
                               ========  ========   ========  ========

 Recurring diluted EPS         $   0.39  $   0.29   $   0.76  $   0.58
                               ========  ========   ========  ========


 Condensed Balance Sheets                 (Unaudited)
 In Thousands of Dollars                    June 28,      December 31,
                                              2008            2007

 Assets:
  Current Assets
     Cash and cash equivalents                43,232           45,807
     Trade Receivables, net                   92,672           73,248
     Inventories, net                        104,963          101,835
     Deferred income taxes                     8,689            8,286
     Receivable from sale of Electronics          --           17,100
     Prepaid expenses and other                7,845            5,578
     Assets held for sale                      4,676            4,728
                                         ------------     ------------
 Total current assets                        262,077          253,015
   Property, plant and equipment, net        113,745          113,043
   Intangible assets, net                     86,479           88,943
   Goodwill                                  115,352          114,979
   Deferred income taxes                         141              231
   Other assets                                5,052            6,747
                                         ------------     ------------
 Total assets                              $ 582,846        $ 580,525
                                         ============     ============

 Liabilities and stockholders' equity
   Current liabilities
     Accounts payable                         42,941           41,668
     Accrued payroll                          15,914           16,988
     Accruals and other liabilities           21,954           22,001
     Deferred income taxes                     8,060            8,060
     Current portion of long-term debt         3,419            2,667
                                         ------------     ------------
   Total current liabilities                  92,288           91,384
     Long-term debt, less current
      portion and net of unaccreted
      discount and premium                   272,351          291,399
     Deferred income taxes                    24,910           24,490
     Pension liabilities                      12,260           13,431
     Other post retirement benefits            2,634            3,170
     Long-term taxes payable                   5,852            5,911
     Other long-term liabilities               4,366            4,308
                                         ------------     ------------
  Total stockholders' equity                 168,185          146,432
                                         ------------     ------------
 Total liabilities and
  stockholders' equity                     $ 582,846        $ 580,525
                                         ============     ============

The company will conduct an investor conference call on August 5, 2008 at 11:00 AM EDT to discuss its unaudited second-quarter 2008 financial results. The public is invited to listen to the conference call by dialing 800-895-0198 domestically or 785-424-1053 for international access and asking to participate in Conference ID# ALTRA. Also, the company has posted slides on its web site at http://www.altramotion.com in the Investor Relations Section in the Events & Presentations tab to help the participants better follow the discussion. A replay of the recorded conference call will be available until midnight on August 12, 2008. To listen to the replay, dial 800-283-4783 domestically or 402-220-0859 for international access.

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 mechanical power transmission products. The company brings together strong brands covering over 40 product lines, with production facilities in eight 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 and Warner Linear.

The Altra Holdings, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4038

Discussion of Non-GAAP Measures

As used in this news release and the accompanying slides posted on its website, non-GAAP recurring diluted earnings per share is calculated using net income from continuing operations that excludes premiums and interest expense associated with extinguished debt, OPEB curtailment gain, and restructuring charges that management does not consider to be directly related to the company's core operating performance. Non-GAAP recurring diluted net income per share is calculated by dividing non-GAAP recurring net income by GAAP weighted average shares outstanding (diluted).

Altra believes that the presentation of non-GAAP recurring net income, non-GAAP recurring diluted earnings per share, and adjusted EBITDA provides important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. For further information regarding why Altra believes that these non-GAAP measures provide useful information to investors, and some of the limitations associated with the use of these measures, please refer to the company's Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC's website at http://www.sec.gov.

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. Such statements are based on financial data, market assumptions and business plans 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. 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 U.S. and abroad, (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, (7) increased costs of raw materials used in our products, (8) product liability claims, (9) work stoppages and other labor issues, (10) changes in environmental, tax and other laws and changes in the enforcement of laws, (11) loss of key management and other personnel, (12) changes in pension and retirement liabilities, (13) the ability to achieve business plans, including with respect to an uncertain economic environment; (14) the ability to successfully execute, manage and integrate key acquisitions and mergers (15) failure to obtain or protect intellectual property rights, (16) failure of operating equipment or information technology infrastructure and (17) risks associated with our debt leverage and operating covenants under our debt instruments, (18) as well as other risks, uncertainties and other factors described in the company's Form 10-Q, 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. Altra Holdings, Inc. is under no obligation to, and expressly disclaims any obligation to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise.

AIMC-E

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SOURCE: Altra Holdings, Inc.

Altra Holdings, Inc.
          Christian Storch, Chief Financial Officer
          (617) 689-6380
          Christian.storch@altramotion.com

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