Altra Industrial Motion
Nov 1, 2010

Altra Holdings Reports 23% Year-Over-Year Sales Increase in Third Quarter 2010

Nov 1, 2010 (GlobeNewswire via COMTEX News Network) --

  --  Gross margins increase 270 BPS to 30% and operating margins grow 450 BPS
      to 10.5%;
  --  Diluted EPS Grows to $0.25 from $0.02 in the prior year quarter;
  --  Company raises top- and bottom-line guidance for 2010;
  --  Distribution channel and other early-cycle markets drive demand;
  --  Late-cycle markets continue to show improvement


BRAINTREE, Mass., Nov. 1, 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 third quarter ended October 2, 2010.

Financial Highlights

  --  Third-quarter net sales increased 23% to $128.9 million compared with
      the prior-year third quarter.

  --  Third-quarter net income was $0.25 per diluted share compared with $0.02
      per diluted share in the prior-year period. Non-GAAP adjusted earnings
      per diluted share were $0.26 for the third quarter of 2010 compared with
      $0.06 in the prior year.*

  --  Gross profit margin increased 270 basis points to 30.0% from the third
      quarter of 2009.

  --  Income from operations increased 450 basis points to 10.5% of sales from
      the third quarter of 2009. Non-GAAP adjusted income from operations
      increased 400 basis points to 10.9% of sales year-over-year.*

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


Management Comments

"We were very pleased with the excellent results we were able to achieve in what is usually a seasonally slow quarter," said Carl Christenson, President and CEO. "We grew sales 23% over the prior year and reported a 333% increase in non-GAAP adjusted diluted EPS to $0.26. Strong sales from our early-cycle end markets, coupled with increasing demand from our late-cycle markets drove the year-over-year revenue growth. We believe that our sales growth continues to be the result of real end-user demand as our distribution order rate remains healthy and distributors are not building a significant level of inventory. Altra's 94% year-over-year increase in non-GAAP adjusted income from operations demonstrates the leverage we have gained as a result of our permanent cost reductions and productivity initiatives."

Financial Results

Net sales for the third quarter of 2010 increased 23% to $128.9 million from $104.8 million in the same period of the prior year.

Income from operations for the third quarter of 2010 was $13.6 million compared with $6.3 million in the prior-year third quarter. Income from operations in the third quarter of 2010 and 2009 included restructuring charges of $0.5 million and $1.0 million, respectively. Excluding the charges in both periods, non-GAAP adjusted income from operations increased 94% to $14.1 million, or 10.9% of sales, in the third quarter of 2010 compared with $7.3 million, or 6.9% of sales, in the third quarter of 2009.

Other income was $0.3 million in the third quarter of 2010 compared with $0.4 million in the year-earlier quarter, due primarily to favorable foreign currency exchange rates.

For the third quarter of 2010, the Company reported net income of $6.6 million, or $0.25 per diluted share. This compares with net income of $0.6 million, or $0.02 per diluted share, in the prior-year third quarter. Excluding the items described above in both periods and the premium paid on the repurchase of debt in 2009, non-GAAP adjusted earnings per diluted share were $0.26 in the third quarter of 2010 compared with $0.06 in the prior-year period.

Cash and cash equivalents were $72.2 million at October 2, 2010, up 40% from year-end December 31, 2009. Free cash flow generated during the year-to-date period was $24.6 million.*

Business Outlook

"As a result of our strong third-quarter performance and the positive signs we continue to see in our end markets, we are increasing our guidance for both revenue and EPS for full year 2010. This guidance takes into consideration the inherent seasonality of our business, resulting in second-half revenues being slightly lower than the first half."

Altra is raising its guidance and is currently forecasting 2010 sales in the range of $512 to $517 million and non-GAAP adjusted EPS of $0.95 to $1.00 for the full year. The Company expects capital expenditures to be approximately $17 million as Altra continues to fund growth opportunities, and depreciation and amortization in the range of $21 to $22 million. The Company is raising its non-GAAP free cash flow projection to $25-$30 million for the full year. The Company expects its tax rate for the full year to be in the range of 29.0% to 31.0%.

"Looking further ahead, we are optimistic about our growth prospects in 2011," said Christenson. "We expect that demand at our early-cycle markets will remain strong and that we will continue to see improvement from most of our late-cycle markets as the year progresses. Strategically, we plan to capitalize on growth opportunities in new and existing markets, increase our presence in key underpenetrated geographic regions, enter new high-growth markets and pursue strategic acquisitions. During 2010 we made great strides in increasing the profit leverage in our business model, and we will continue to focus on enhancing profitability in 2011 through our ongoing efficiency and productivity initiatives."

                                     Altra Holdings, Inc.



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

  In Thousands of Dollars, except per      October 2,   September    October 2,   September
   share amounts                             2010       26, 2009       2010        26, 2009
                                          -----------  -----------  -----------  ------------
                                          (Unaudited)  (Unaudited)  (Unaudited)   (Unaudited)

  Net sales                                 $ 128,930    $ 104,766    $ 389,624     $ 341,183

  Cost of sales                                90,289       76,194      273,453       250,950
                                          -----------  -----------  -----------  ------------
   Gross profit                              $ 38,641     $ 28,572    $ 116,171      $ 90,233
   Gross profit as a percent of net
    sales                                       30.0%        27.3%        29.8%         26.4%
  Selling, general & administrative
   expenses                                    22,804       19,290       65,991        60,971
  Research and development expenses             1,746        1,508        5,156         4,569
  Other post employment benefit plan
   settlement gain                                 --           --           --       (1,467)
  Loss on disposal of assets                       --          516           --           516

  Restructuring expense                           510        1,006        2,198         5,360
                                          -----------  -----------  -----------  ------------
   Income from operations                    $ 13,581      $ 6,252     $ 42,826      $ 20,284
   Income from operations as a percent
    of net sales                                10.5%         6.0%        11.0%          5.9%
  Interest expense, net                         4,838        6,290       14,734        18,879
  Other non-operating (income) expense,
   net                                          (272)        (371)          750         1,248
                                          -----------  -----------  -----------  ------------

   Income from continuing operations
    before income taxes                       $ 9,015        $ 333     $ 27,342         $ 157

  Provision (benefit) for income taxes          2,441        (315)        8,190         (143)
                                          -----------  -----------  -----------  ------------

  Income tax rate                               27.1%       -94.6%        30.0%        -91.1%
                                          -----------  -----------  -----------  ------------

   Net income                                 $ 6,574        $ 648     $ 19,152         $ 300
                                          ===========  ===========  ===========  ============


  Weighted Average common shares
   outstanding
   Basic                                       26,414       25,961       26,364        25,940
   Diluted                                     26,495       26,213       26,477        26,112

  Net income per share
   Basic                                         0.25         0.02         0.73          0.01
   Diluted                                     $ 0.25       $ 0.02       $ 0.72        $ 0.01

  Reconciliation of Non-GAAP Adjusted
   Income From
  Operations:

   Income from operations                    $ 13,581      $ 6,252     $ 42,826      $ 20,284

   Restructuring charges                          510        1,006        2,198         5,360
   Inventory adjustment due to economic
    downturn                                       --           --           --         2,215
   Other post employment benefit plan
    settlement gain                                --           --           --       (1,467)
                                          -----------  -----------  -----------  ------------
    Non-GAAP adjusted income from
     operations                              $ 14,091      $ 7,258     $ 45,024      $ 26,392
                                          ===========  ===========  ===========  ============

  Reconciliation of Non-GAAP Adjusted
   Net Income:

   Net income                                 $ 6,574        $ 648     $ 19,152         $ 300

   Restructuring charges                          510        1,006        2,198         5,360
   Inventory adjustment due to economic
    downturn                                       --           --           --         2,215
   Loss on sale of asset                           --           --           --           225
   Premium and deferred financing
    expense eliminated on the
   redeemed debt                                   --          429           --           501
   Other post employment benefit plan
    settlement gain                                --           --           --       (1,467)

   Tax impact of above adjustments          (175) (1)    (397) (2)    (751) (3)   (2,186) (4)
                                          -----------  -----------  -----------  ------------

    Non-GAAP adjusted net income              $ 6,909      $ 1,686     $ 20,599       $ 4,948
                                          ===========  ===========  ===========  ============


  Non-GAAP adjusted diluted earnings per
   share                                       $ 0.26       $ 0.06       $ 0.78        $ 0.19
                                          ===========  ===========  ===========  ============


  (1) - tax impact is calculated by multiplying the estimated effective tax rate for the
   period of 34.3% by the above items
  (2) - tax impact is calculated by multiplying the estimated effective tax rate for the
   period of 27.7% by the above items
  (3) - tax impact is calculated by multiplying the estimated effective tax rate for the
   period of 34.2% by the above items
  (4) - tax impact is calculated by multiplying the estimated effective tax rate for the
   period of 32.0% by the above items


  Consolidated Balance Sheets
                                October 2,   December
  In Thousands of Dollars         2010       31, 2009
                               (Unaudited)
  Assets:
   Current Assets
    Cash and cash equivalents       72,161      51,497
    Trade Receivables, net          72,124      52,855
    Inventories                     80,299      71,853
    Deferred income taxes            9,274       9,265
    Income tax receivable               --       4,754
    Assets held for sale             1,484          --
    Prepaid expenses and
     other current assets            3,940       3,647
                               -----------  ----------
  Total current assets             239,282     193,871
    Property, plant and
     equipment, net                104,268     105,603
    Intangible assets, net          70,892      74,905
    Goodwill                        78,947      78,832
    Deferred income taxes              650         679
    Other non-current assets,
     net                            11,199      11,309
                               -----------  ----------

  Total assets                   $ 505,238   $ 465,199
                               ===========  ==========

  Liabilities and
   stockholders' equity
   Current liabilities
    Accounts payable                36,826      27,421
    Accrued payroll                 17,353      12,133
    Accruals and other
     liabilities                    30,512      19,971
    Deferred income taxes            7,087       7,275
    Current portion of
     long-term debt                  3,356       1,059
                               -----------  ----------
   Total current liabilities        95,134      67,859
    Long-term debt, less
     current portion and net
    of unaccreted discount
     and premium                   213,183     216,490
    Deferred income taxes           17,169      21,051
    Pension liabilities              8,358       9,862
    Long-term taxes payable          8,883       9,661
    Other long-term
     liabilities                       892       1,333
                               -----------  ----------
    Total stockholders'
     equity                        161,619     138,943
                               -----------  ----------
  Total liabilities and
   stockholders' equity          $ 505,238   $ 465,199
                               ===========  ==========



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

                                                             September
                                                October 2,      26,
                                                  2010         2009
                                               -----------  -----------
                                               (Unaudited)  (Unaudited)
  Cash flows from operating activities
  Net income                                      $ 19,152        $ 300
  Adjustments to reconcile net income to net
   cash flows:
   Depreciation                                     12,315       12,547
   Amortization of intangible assets                 3,713        4,137
   Amortization and write-offs of deferred
    financing costs                                    536        1,560
   Loss on foreign currency, net                       270        1,092
   Accretion and write-off of debt discount,
    net                                                225          621
   Fixed asset impairment/disposal                     441        2,563
   Other post employment benefit plan
    settlement gain                                     --      (1,467)
   Stock based compensation                          1,670        2,273
   Changes in assets and liabilities:
    Trade receivables                             (18,798)       13,025
    Inventories                                    (8,687)       27,626
    Accounts payable and accrued liabilities        27,429     (11,929)
    Other current assets and liabilities             (752)           71

    Other operating assets and liabilities           (186)        (365)
                                               -----------  -----------

   Net cash provided by operating activities        37,328       52,054
                                               -----------  -----------
  Cash flows from investing activities
  Purchase of property, plant and equipment       (12,725)      (5,105)
  Additional purchase price paid for
   acquisition                                     (1,177)           --
                                               -----------  -----------

   Net cash used in investing activities          (13,902)      (5,105)
                                               -----------  -----------
  Cash flows from financing activities
  Payment on 11 1/4% Old Senior Notes                   --      (4,950)
  Payment on 9% Old Senior Secured Notes                --     (22,200)
  Payments on Old Revolving Credit Agreement            --      (3,000)
  Proceeds from additional borrowings under
   existing mortgage                                    --        1,467
  Payment of issuance costs on 8 1/8% Senior
   Secured Notes                                     (265)           --
  Shares surrendered for tax withholdings            (854)        (259)
  Payment on mortgages                               (481)        (524)

  Payment on capital leases                          (563)        (614)
                                               -----------  -----------

   Net cash used in financing activities           (2,163)     (30,080)
                                               -----------  -----------
  Effect of exchange rate changes on cash and
   cash equivalents                                  (599)        2,998
                                               -----------  -----------
   Net change in cash and cash equivalents          20,664       19,867
  Cash and cash equivalents at beginning of
   year                                             51,497       52,073
                                               -----------  -----------

  Cash and cash equivalents at end of period      $ 72,161     $ 71,940
                                               ===========  ===========

  Reconciliation to free cash flow:
  Net cash provided by operating activities         37,328       52,054

  Purchase of property, plant and equipment       (12,725)      (5,105)
                                               -----------  -----------


  Free cash flow                                  $ 24,603     $ 46,949
                                               ===========  ===========

The Company will conduct an investor conference call to discuss its unaudited third quarter financial results on Tuesday, November 2, 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 "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 after the conclusion of the call on November 2, 2010 through midnight on November 9, 2010. To listen to the replay, dial 877-660-6853 domestically or 201-612-7415 for international access, dial account # 364 then replay ID # 359424. A webcast replay also will be available at www.altramotion.com.

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 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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