Altra Industrial Motion
Nov 2, 2009

Altra Holdings Announces Financial Results for the Third Quarter of 2009

BRAINTREE, Mass., Nov 2, 2009 (GlobeNewswire 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 third quarter of 2009.

Financial Highlights



 * Diluted EPS was $0.02; excluding restructuring charges and
   expenses associated with the redemption of debt, non-GAAP
   recurring diluted EPS was $0.06 for the third quarter. (a)

 * Operating cash flow was $24.3 million for the third quarter and
   a record $52.1 million for the first nine months of 2009.

 * Reduced debt by nearly $16 million during the quarter,
   bringing debt reduction for the first nine months of 2009 to
   nearly $30 million.

 * Quarterly net sales decreased 34.3% year-over-year to $104.8
   million, which includes the adverse impact from foreign exchange
   of approximately 280 bps.

 * Cost reduction and facility consolidation activities on plan to
   achieve previously communicated $60 million in savings during
   2009.

 * Narrows financial guidance for 2009.

(a) This press release includes non-GAAP financial measures. Please see below under "Discussion of Non-GAAP Financial Measures" for a discussion of our use of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial measures.

Comments on the Third Quarter

"We performed well in terms of overall operating results in the third quarter amid a generally weak end-market environment," said Carl Christenson, President and CEO. "Our focus on cash generated $47.0 million of free cash flow in the first nine months, significantly exceeding our expectations for the full year."

"While third-quarter revenue decreased 34.3% from the very strong prior-year third quarter, our gross profit margin of 27.3% only declined by 140 basis points as a result of our cost-reduction efforts combined with lower raw material cost," continued Christenson. "In addition, we increased our gross profit margin by 100 basis points from the second quarter of 2009 even though revenues were down 6% sequentially in what is typically a seasonally slow quarter."

"We lowered inventories by more than $7.0 million during the third quarter and reduced selling, general and administrative expenses by nearly 25% on a year-over-year basis," continued Christenson. "As a result, we generated strong cash flow and strengthened our balance sheet by reducing our debt by nearly $16.0 million during the quarter."

Financial Results

Net sales for the third quarter of 2009 decreased 34.3% to $104.8 million from $159.4 million in the third quarter of 2008. Net sales for the nine months ended September 26, 2009 decreased 30.4% to $341.2 million from $490.5 million for the first nine months of 2008.

Operating income for the third quarter of 2009 decreased 66.3% to $6.3 million from $18.5 million in the third quarter of 2008. Excluding restructuring charges, operating income for the third quarter of 2009 was $7.3 million, or 7.0% of sales. Operating income for the first nine months of 2009 decreased 66.8% to $20.3 million from $61.2 million in the same period of 2008. Excluding restructuring charges, OPEB curtailment gain and inventory adjustments due to the economic downturn, operating income for the first nine months of 2009 decreased 56.9% to $26.4 million, or 7.7% of sales.

Reported net income for the third quarter was $0.6 million, or $0.02 per diluted share, compared with net income of $8.8 million, or $0.34 per diluted share, for the third quarter of 2008. Reported net income for the nine-month period of 2009 was $0.3 million, or $0.01 per diluted share, compared with net income of $27.2 million, or $1.04 per diluted share, for the same period a year ago.

Non-GAAP recurring diluted earnings per share from continuing operations for the third quarter of 2009 was $0.06 per diluted share, down from $0.35 per diluted share in the third quarter of 2008. Non-GAAP recurring diluted earnings per share from continuing operations for the first nine months of 2009 was $0.19 per diluted share compared with $1.11 per diluted share for the first nine months of 2008.

Business Outlook

"We are cautiously optimistic that conditions in several end-markets that we serve are gradually improving," said Christenson. "It appears that destocking and inventory liquidation efforts by our customers are beginning to come to an end as sales to our largest distribution customers are improving. For the first time in 2009 we saw a positive book-to-bill ratio in the third quarter. We have also seen an increase in project-related quoting activities. At the same time, our cost-reduction efforts are on track and we continue to expect to realize $60 million in savings during 2009."

"We will continue to focus on generating cash and decreasing our borrowing levels as we complete the final quarter of 2009 and begin 2010. We now expect to report free cash flow in the range of $50 to $55 million for the year," concluded Christenson.

For 2009, the Company is forecasting net sales to be in the range of $440 million to $450 million and non-GAAP recurring diluted earnings per share in the range of $0.20 to $0.25. Capital expenditures are expected to be in the range of $8.0 million to $9.0 million, and depreciation and amortization in the range of $21.5 million to $22.5 million. The Company no longer provides guidance relative to the tax rate.



                               Altra Holdings, Inc.

                                (Unaudited)            (Unaudited)
 Consolidated Statements    --------------------  --------------------
  of Income Data:                                     Year to Date
 In Thousands of Dollars,      Quarter Ended          Period Ended
  except per share amounts  Sept. 26,  Sept. 27,  Sept. 26,  Sept. 27,
                              2009       2008       2009       2008
                            ---------  ---------  ---------  ---------
 Net sales                  $ 104,766  $ 159,448  $ 341,183  $ 490,523
 Cost of sales                 76,194    113,627    250,950    346,517
                            ---------  ---------  ---------  ---------
  Gross profit              $  28,572  $  45,821  $  90,233  $ 144,006
  Gross profit as a percent
   of net sales                  27.3%      28.7%      26.4%      29.4%
 Selling, general &
  administrative expenses      19,290     25,655     60,971     76,816
 Research and development
  expenses                      1,508      1,663      4,569      5,160
 Other post employment
  benefit plan settlement
  gain                             --       (107)    (1,467)      (276)
 Restructuring expense          1,006         81      5,360      1,149
 Loss on disposal of assets       516         --        516         --
                            ---------  ---------  ---------  ---------
  Income from operations    $   6,252  $  18,529  $  20,284  $  61,157
  Income from operations as
   a percent of net sales         6.0%      11.6%       5.9%      12.5%
 Interest expense, net          6,290      7,302     18,879     22,456
 Other non-operating
  expense (income), net          (371)    (1,408)     1,248     (2,887)
                            ---------  ---------  ---------  ---------
  Income from continuing
   operations before income
   taxes                    $     333  $  12,635  $     157  $  41,588
 Provision (Benefit) for
  income taxes                   (315)     4,000       (143)    14,127
                            ---------  ---------  ---------  ---------
 Income tax rate               -94.6%       31.7%    -91.1%       34.0%
  Net income from
   continuing operations          648      8,635        300     27,461
 Net income (loss) from
  discontinued operations,
  net of taxes of $43 for
  the year to date period
  ended September 27, 2008         --        172         --       (224)
                            ---------  ---------  ---------  ---------
  Net income                $     648  $   8,807  $     300  $  27,237
                            =========  =========  =========  =========

 Weighted Average common
  shares outstanding
  Basic                        25,961     25,488     25,940     25,479
  Diluted                      26,213     26,157     26,112     26,159

 Earnings per share - Basic
  Net income from
   continuing operations    $    0.02  $    0.34  $    0.01  $    1.08
  Net income (loss) from
   discontinued operations         --       0.01         --      (0.01)
                            ---------  ---------  ---------  ---------
  Net income                $    0.02  $    0.35  $    0.01  $    1.07

 Earnings per share -
  Diluted
  Net income from
   continuing operations    $    0.02  $    0.33  $    0.01  $    1.05
  Net income (loss) from
   discontinued operations         --       0.01         --      (0.01)
                            ---------  ---------  ---------  ---------
  Net income                $    0.02  $    0.34  $    0.01  $    1.04

 Reconciliation of
  Recurring Net Income:

  Net income from
   continuing operations    $     648  $   8,635  $     300  $  27,461

  Restructuring charges,
   net of tax                     717         55      3,640        749
  Inventory adjustment due
   to economic downturn,
   net of tax                      --         --      1,364         --
  Net discount/premium &
   deferred financing
   expense on redeemed
   debt, net of tax               321        513        388      1,122
  Other post employment
   benefit plan settlement
   gain, net of tax                --        (73)      (904)      (183)
  Gain on the sale of
   securities, net of tax          --         --         --       (141)
  Loss on the sale of
   asset, net of tax               --         --        160         --
                            ---------  ---------  ---------  ---------
 Recurring net income       $   1,686  $   9,130  $   4,948  $  29,008
                            =========  =========  =========  =========

 Recurring diluted earnings
  per share                 $    0.06  $    0.35  $    0.19  $    1.11
                            =========  =========  =========  =========

 Consolidated Balance Sheets                        (Unaudited)
 In Thousands of Dollars                       Sept. 26,     Dec. 31,
                                                 2009          2008
 Assets:
  Current Assets
   Cash and cash equivalents                      71,940      52,073
   Trade Receivables, net                         58,605      68,803
   Inventories                                    72,255      98,410
   Deferred income taxes                           8,032       8,032
   Prepaid expenses and other current assets      10,054       6,514
   Assets held for sale                               --       4,676
                                              ----------  ----------
 Total current assets                            220,886     238,508
   Property, plant and equipment, net            107,769     110,220
   Intangible assets, net                         76,447      79,339
   Goodwill                                       78,955      77,497
   Deferred income taxes                             495         495
   Other non-current assets, net                   6,319       7,525
                                              ----------  ----------
 Total assets                                 $  490,871  $  513,584
                                              ==========  ==========

 Liabilities and stockholders' equity
  Current liabilities
   Accounts payable                               25,819      33,890
   Accrued payroll                                13,438      16,775
   Accruals and other liabilities                 25,533      18,755
   Deferred income taxes                           6,906       6,906
   Current portion of long-term debt                 995       3,391
                                              ----------  ----------
 Total current liabilities                        72,691      79,717
   Long-term debt, less current portion and
    net of unaccreted discount and premium       231,633     258,132
   Deferred income taxes                          23,318      23,336
   Pension liabilities                            11,730      11,854
   Other post retirement benefits                     63       2,270
   Long-term taxes payable                         9,075       7,976
   Other long-term liabilities                     2,080       1,434
                                              ----------  ----------
 Total stockholders' equity                      140,281     128,865
                                              ----------  ----------
 Total liabilities and stockholders' equity   $  490,871  $  513,584
                                              ==========  ==========

                                                  Year to date ended
                                                ----------------------
                                                 Sept. 26,   Sept. 27,
                                                   2009        2008
                                                ----------  ----------
 Cash flows from operating activities
 Net income                                     $      300  $   27,237
 Adjustments to reconcile net income to net
  cash flows:
  Depreciation                                      12,547      12,409
  Amortization of intangible assets                  4,137       4,346
  Amortization and write-offs of deferred
   financing costs                                   1,560       1,863
  Loss (gain) on foreign currency, net               1,092      (1,597)
  Accretion of debt discount, net                      621         759
  Loss on sale of Electronics Division                  --         224
  Fixed asset impairment/disposal                    2,563          --
  Loss on sale of fixed assets                          --         193
  Other post employment benefit plan
   settlement gain                                  (1,467)       (276)
  Stock based compensation                           2,273       1,516
  Changes in assets and liabilities:
   Trade receivables                                13,025     (14,905)
   Inventories                                      27,626      (5,871)
   Accounts payable and accrued liabilities        (11,929)      5,885
   Other current assets and liabilities                 71        (383)
   Other operating assets and liabilities             (365)        234
                                                ----------  ----------
  Net cash provided by operating activities         52,054      31,634
                                                ----------  ----------
 Cash flows from investing activities
 Purchase of property, plant and equipment          (5,105)    (12,234)
 Proceeds from sale of Electronics Division             --      17,310
                                                ----------  ----------
  Net cash provided by (used in) investing
   activities                                       (5,105)      5,076
                                                ----------  ----------
 Cash flows from financing activities
 Payments on Senior Notes                           (4,950)     (1,346)
 Payments on Senior Secured Notes                  (22,200)    (27,500)
 Payments on Revolving Credit Agreement             (3,000)     (1,723)
 Proceeds from additional borrowings under an
  existing mortgage                                  1,467          --
 Shares repurchased for tax withholding               (259)         --
 Payment on mortgages                                 (524)       (228)
 Payment on capital leases                            (614)       (779)
                                                ----------  ----------
  Net cash used in financing activities            (30,080)    (31,576)
                                                ----------  ----------
 Effect of exchange rate changes on cash and
  cash equivalents                                   2,998      (1,119)
                                                ----------  ----------
  Net change in cash and cash equivalents           19,867       4,015
 Cash and cash equivalents at beginning of year     52,073      45,807
                                                ----------  ----------
 Cash and cash equivalents at end of period     $   71,940  $   49,822
                                                ==========  ==========
 Reconciliation to free cash flow:
 Net cash provided by operating activities          52,054      31,634
 Purchase of property, plant and equipment          (5,105)    (12,234)
                                                ----------  ----------

 Free cash flow                                 $   46,949  $   19,400
                                                ==========  ==========

Earnings Call

The company will conduct an investor conference call on November 3, 2009 at 11:00 a.m. EST to discuss its unaudited third-quarter 2009 financial results. The public is invited to listen to the conference call by dialing 877-302-0756 domestically or 502-719-4487 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 November 10, 2009. To listen to the replay, dial 800-752-3416 domestically or 712-432-9141 for international access.

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 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.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 recurring diluted earnings per share, non-GAAP recurring income from operations and non-GAAP recurring net income are each calculated using either net income from continuing operations or income from continuing operations that excludes premiums, discounts and interest expense associated with the extinguishment of debt, other post employment benefit plan settlement gains, restructuring costs, inventory adjustments due to the economic downturn and other income or charges that management does not consider to be directly related to the company's core operating performance. Non-GAAP recurring diluted earnings per share is calculated by dividing non-GAAP recurring net income by GAAP weighted average shares outstanding (diluted).

As used in this release and the accompanying slides posted on the company's website, non-GAAP free cash flow is calculated as cash flow from operating activities less capital expenditures.

Altra believes that the presentation of non-GAAP recurring net income, non-GAAP recurring income from operations, non-GAAP recurring 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.

Cautionary Statement Regarding 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, those comments regarding customer destocking and inventory efforts, expectations related to the results of cost-reduction efforts, plans to focus on generating cash and decreasing borrowing levels and our ability to achieve those results, expectations for free cash flow for 2009, and our guidance relating to free cash flow, net sales, earnings per share, capital expenditures, and depreciation and amortization.

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) fluctuations in the costs of raw materials used in our products, (8) product liability claims, (9) work stoppages and other labor issues, (10) changes in employment, 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) 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 and operating covenants under our debt instruments, (19) risks associated with the global recession and volatility and disruption in the global financial markets, (20) our ability to complete cost reduction actions and risks associated with such actions, and (21) 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

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SOURCE: Altra Holdings, Inc.

CONTACT:  Altra Holdings, Inc.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com

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