Altra Industrial Motion
Aug 2, 2010

Altra Holdings Announces 19% Year-over-Year Sales Growth for Second Quarter 2010

Aug 2, 2010 (GlobeNewswire via COMTEX News Network) --

  --  Gross profit margin of 30.2% and operating margin of 11.8%;
  --  Diluted EPS climbs to $0.26 from loss of $0.07 in the prior year
      quarter;
  --  Company raises top- and bottom-line guidance for 2010;
  --  Distribution channel and other early-cycle markets drive demand
      improvement


BRAINTREE, Mass., Aug. 2, 2010 (GLOBE NEWSWIRE) -- 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 ended July 3, 2010.

Financial Highlights

  --  Second-quarter net sales increased 19% to $133.0 million compared with
      the prior-year second quarter. Sales increased 4% from the sequential
      first quarter of 2010.


  --  Second-quarter net income was $0.26 per diluted share compared with a
      loss of $0.07 per share in the prior-year period. Non-GAAP adjusted
      earnings per diluted share were $0.27 for the second quarter of 2010
      compared with $0.01 in the prior year.*


  --  Gross profit margin increased 390 basis points to 30.2% from the second
      quarter of 2009.

  --  Income from operations increased 680 basis points to 11.8% of sales from
      the second quarter of 2009. Non-GAAP adjusted income from operations
      increased 490 basis points to 12.2% of sales year over year.*

  --  Company raises sales and earnings per share guidance on continued
      early-cycle demand strength, improving late-cycle outlook and strong
      earnings leverage.


Management Comments

"Our early-cycle end markets continued to drive strong demand in the second quarter, resulting in 19% year-over-year and 4% sequential revenue growth," said Carl Christenson, President and CEO. "We believe that substantially all of the sales increase in the second quarter was the result of end-user demand as our distributors essentially completed destocking activities and do not appear to be restocking yet. Gross profit margin improved 390 basis points to 30.2% and operating margin increased 680 basis points to 11.8%, both approaching all-time highs for the Company and reflecting excellent operating leverage in our business. As a result of this leverage and our cost-reduction and productivity initiatives, we achieved second-quarter non-GAAP adjusted earnings per diluted share of $0.27 compared with $0.01 a year ago."

Financial Results

Net sales for the second quarter of 2010 increased 19% to $133.0 million from $111.9 million in the same period of the prior year.

Income from operations for the second quarter of 2010 was $15.6 million compared with income from operations of $5.5 million in the prior-year second quarter. Income from operations in the second quarter of 2010 included restructuring charges of $0.6 million and income from operations in the second quarter of 2009 included restructuring costs and a loss on the sale of assets totaling $2.7 million. Excluding the charges in both periods, non-GAAP adjusted income from operations increased 98% to $16.3 million, or 12.2% of sales, in the second quarter of 2010 compared with non-GAAP adjusted income from operations of $8.3 million, or 7.3% of sales, in the second quarter of 2009.

Other expense was $0.7 million in the second quarter of 2010 compared with $1.8 million in the year-earlier quarter, due primarily to unfavorable foreign currency exchange rates.

For the second quarter of 2010, the Company reported net income of $6.8 million, or $0.26 per diluted share. This compares with a net loss of $1.8 million, or $0.07 per share, in the prior-year second quarter. Excluding the items described above in both periods, non-GAAP adjusted earnings per diluted share were $0.27 in the second quarter of 2010 compared with $0.01 in the prior-year period.

Cash and cash equivalents were $58.2 million at July 3, 2010, up 13% from year-end December 31, 2009. Non-GAAP free cash flow generated during the year-to-date period was $12.2 million.*

Business Outlook

"Our focus as we begin the second half of 2010 is to execute on our long-term growth strategy," said Christenson. "Our strategy includes investing in growth opportunities with both existing and new customers, targeting key underpenetrated geographic regions, entering new high-growth markets, enhancing our efficiency and productivity through the Altra Business System by continuing to develop our people and processes, and pursuing strategic acquisitions."

"We continue to expect to report year-over-year growth in the second half of 2010 and we are raising our guidance for the full year," said Christenson. "However, given the strong rate of growth in the first half of the year and the inherent seasonality in our business, we are forecasting revenues in the second half of 2010 to be somewhat lower than the first half."

The Company is raising its guidance and is currently forecasting 2010 sales in the range of $485 to $500 million and non-GAAP adjusted diluted EPS of $0.72 to $0.82 for the full year. The Company expects capital expenditures in the range of $14 to $15 million and depreciation and amortization in the range of $21 to $22 million. The Company expects its tax rate for the full year to be in the range of 31.0% to 33.0%.

The Company will conduct an investor conference call to discuss its unaudited second quarter financial results on Tuesday, August 3, 2010 at 11:00 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 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 August 3, 2010 through midnight on August 10, 2010. To listen to the replay, dial 877-660-6853 domestically or 201-612-7415 for international access, dial account # 364 then replay ID # 354148. A webcast replay also will be available at www.altramotion.com.

                 Altra Holdings, Inc.


  Consolidated Statements of Income
   Data:                                       Quarter Ended           Year to Date Ended
                                          ------------------------  ------------------------

  In Thousands of Dollars, except per       July 3,     June 27,      July 3,     June 27,
   share amounts                             2010         2009         2010         2009
                                          -----------  -----------  -----------  -----------
                                          (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

  Net sales                                 $ 132,988    $ 111,877    $ 260,694    $ 236,417

  Cost of sales                                92,861       82,419      183,164      174,756
                                          -----------  -----------  -----------  -----------
    Gross profit                             $ 40,127     $ 29,458     $ 77,530     $ 61,661
    Gross profit as a percent of net
     sales                                      30.2%        26.3%        29.7%        26.1%
  Selling, general & administrative
   expenses                                    22,215       19,938       43,187       41,681
  Research and development expenses             1,631        1,494        3,410        3,061
  Other post employment benefit plan
   settlement gain                                 --           --           --      (1,467)

  Restructuring expense                           642        2,482        1,688        4,354
                                          -----------  -----------  -----------  -----------
    Income from operations                   $ 15,639      $ 5,544     $ 29,245     $ 14,032
    Income from operations as a percent
     of net sales                               11.8%         5.0%        11.2%         5.9%
  Interest expense, net                         4,956        6,240        9,896       12,589

  Other non-operating expense, net                727        1,781        1,022        1,619
                                          -----------  -----------  -----------  -----------
    Income (loss) from continuing
     operations before income taxes           $ 9,956    $ (2,477)     $ 18,327      $ (176)

  Provision (benefit) for income taxes          3,117        (711)        5,749          172
                                          -----------  -----------  -----------  -----------

  Income tax rate                               31.3%        28.7%        31.4%       -97.7%
                                          -----------  -----------  -----------  -----------

    Net income (loss)                         $ 6,839    $ (1,766)     $ 12,578      $ (348)
                                          ===========  ===========  ===========  ===========


  Weighted Average common shares
   outstanding
    Basic                                      26,362       25,931       26,349       25,911
    Diluted                                    26,487       25,931       26,465       25,911

  Net income (loss) per share
    Basic                                        0.26       (0.07)         0.48       (0.01)
    Diluted                                    $ 0.26     $ (0.07)       $ 0.48     $ (0.01)

  Reconciliation of Non-GAAP Adjusted
   Income From Operations:

    Income from operations                   $ 15,639      $ 5,544     $ 29,245     $ 14,032

    Restructuring charges                         642        2,482        1,688        4,354
    Inventory adjustment due to economic
     downturn                                      --           --           --        2,215
    Loss on sale of asset                          --          225           --          225
    Other post employment benefit plan
     settlement gain                               --           --           --      (1,467)
                                          -----------  -----------  -----------  -----------
     Non-GAAP Adjusted income from
      operations                             $ 16,281      $ 8,251     $ 30,933     $ 19,359
                                          ===========  ===========  ===========  ===========

  Reconciliation of Non-GAAP Adjusted
   Net Income:

    Net income (loss)                         $ 6,839    $ (1,766)     $ 12,578      $ (348)

    Restructuring charges                         642        2,482        1,688        4,354
    Inventory adjustment due to economic
     downturn                                      --           --           --        2,215
    Loss on sale of asset                          --          225           --          225
    Premium and deferred financing
     expense eliminated on the
    redeemed debt                                  --           72           --           72
    Other post employment benefit plan
     settlement gain                               --           --           --      (1,467)

    Tax impact of above adjustments          (219)(1)     (783)(2)     (576)(3)   (1,790)(4)
                                          -----------  -----------  -----------  -----------

     Non-GAAP Adjusted net income             $ 7,262        $ 230     $ 13,690      $ 3,261
                                          ===========  ===========  ===========  ===========


  Non-GAAP Adjusted diluted earnings per
   share                                       $ 0.27       $ 0.01       $ 0.52       $ 0.13
                                          ===========  ===========  ===========  ===========


  (1) - tax impact is calculated by multiplying the estimated effective tax rate for the
   period of 34.1% by the above items
  (2) - tax impact is calculated by multiplying the estimated effective tax
   rate for the period of 28.1% by the above items
  (3) - tax impact is calculated by multiplying the estimated effective tax
   rate for the period of 34.1% by the above items
  (4) - tax impact is calculated by multiplying the estimated effective tax
   rate for the period of 33.2% by the above items


  Consolidated Balance Sheets
                                 July 3,     December
  In Thousands of Dollars         2010       31, 2009
                               (Unaudited)
  Assets:
   Current Assets
    Cash and cash equivalents       58,203      51,497
    Trade Receivables, net          69,128      52,855
    Inventories                     74,221      71,853
    Deferred income taxes            9,265       9,265
    Income tax receivable              111       4,754
    Assets held for sale             1,592          --
    Prepaid expenses and
     other current assets            4,762       3,647
                               -----------  ----------
  Total current assets             217,282     193,871
    Property, plant and
     equipment, net                102,118     105,603
    Intangible assets, net          71,262      74,905
    Goodwill                        77,493      78,832
    Deferred income taxes              679         679
    Other non-current assets,
     net                            11,158      11,309
                               -----------  ----------

  Total assets                   $ 479,992   $ 465,199
                               ===========  ==========

  Liabilities and
   stockholders' equity
   Current liabilities
    Accounts payable                36,879      27,421
    Accrued payroll                 13,511      12,133
    Accruals and other
     liabilities                    22,422      19,971
    Deferred income taxes            7,275       7,275
    Current portion of
     long-term debt                  3,307       1,059
                               -----------  ----------
  Total current liabilities         83,394      67,859
    Long-term debt, less
     current portion and net
     of unaccreted discount
     and premium                   213,140     216,490
    Deferred income taxes           21,115      21,051
    Pension liabilities              8,799       9,862
    Long-term taxes payable          9,487       9,661
    Other long-term
     liabilities                       880       1,333
                               -----------  ----------

  Total stockholders' equity       143,177     138,943
                               -----------  ----------
  Total liabilities and
   stockholders' equity          $ 479,992   $ 465,199
                               ===========  ==========




                                                 Year to Date Ended
                                              ------------------------

                                                July 3,     June 27,
                                                 2010         2009
                                              -----------  -----------
                                              (Unaudited)  (Unaudited)
  Cash flows from operating activities
  Net income (loss)                              $ 12,578      $ (348)
  Adjustments to reconcile net income to net
   cash flows:
    Depreciation                                    8,192        8,190
    Amortization of intangible assets               2,350        2,732
    Amortization and write-offs of deferred
     financing costs                                  416          957
    Loss on foreign currency, net                     361        1,379
    Accretion and write-off of debt
     discount, net                                    148          372
    Fixed asset impairment/disposal                   207        1,395
    Other post employment benefit plan
     settlement gain                                   --      (1,467)
    Stock based compensation                        1,120        1,587
    Changes in assets and liabilities:
     Trade receivables                           (18,570)        8,634
     Inventories                                  (4,023)       20,446
     Accounts payable and accrued
      liabilities                                  19,099     (15,384)
     Other current assets and liabilities         (1,672)        (769)

     Other operating assets and liabilities         (173)           83
                                              -----------  -----------
    Net cash provided by operating
     activities                                    20,033       27,807
                                              -----------  -----------
  Cash flows from investing activities
    Purchase of property, plant and
     equipment                                    (7,762)      (3,783)
    Additional purchase price paid for
     acquisition                                  (1,177)           --
                                              -----------  -----------

     Net cash used in investing activities        (8,939)      (3,783)
                                              -----------  -----------
  Cash flows from financing activities
  Payment on 11 1/4% Senior Notes                      --      (4,950)
  Payment on 9% Senior Secured Notes                   --      (8,250)
  Payments on Revolving Credit Agreement               --      (1,000)
  Payment of bond issuance costs                    (122)           --
  Shares forfeited in lieu of tax                   (288)           --
  Payment on mortgages                              (418)        (171)

  Payment on capital leases                         (381)        (381)
                                              -----------  -----------

    Net cash used in financing activities         (1,209)     (14,752)
                                              -----------  -----------
  Effect of exchange rate changes on cash
   and cash equivalents                           (3,179)        2,299
                                              -----------  -----------
    Net change in cash and cash equivalents         6,706       11,571
  Cash and cash equivalents at beginning of
   year                                            51,497       52,073
                                              -----------  -----------

  Cash and cash equivalents at end of period     $ 58,203     $ 63,644
                                              ===========  ===========

  Reconciliation to free cash flow:
  Net cash provided by operating activities        20,033       27,807

  Purchase of property, plant and equipment       (7,762)      (3,783)
                                              -----------  -----------


  Free cash flow                                 $ 12,271     $ 24,024
                                              ===========  ===========

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, 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 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 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 adjusted diluted earnings per share is calculated by dividing non-GAAP adjusted 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 adjusted net income, non-GAAP adjusted 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.

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 Altra's ability to execute its long-term growth strategy, Altra's initiatives to invest in organic growth, seek strategic acquisitions, target key underpenetrated geographic regions, enter new high-growth markets, enhance efficiency and productivity and developing its people and processes; expectations that the demand momentum at early-cycle businesses will continue throughout 2010; encouragement that Altra may see an increase in orders from late cycle markets later this year and good sales growth in 2011; and the Company's guidance for 2010.

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) 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 and operating covenants under our debt instruments, (19) risks associated with restrictions contained in our Senior Secured Notes, (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) our ability to complete cost reduction actions and risks associated with such actions, (23) risks associated with implementation of our new ERP system, and (24) 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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