Altra Industrial Motion
Jul 27, 2012

Altra Holdings Reports 14% Sales Growth in Second Quarter 2012

Gross Margin Climbs to 29.8%; Operating Income Margin of 11.3%

BRAINTREE, Mass., July 27, 2012 (GLOBE NEWSWIRE) -- Altra Holdings, Inc. (Nasdaq:AIMC), a leading global supplier of electromechanical power transmission and motion control products, today announced unaudited financial results for the second quarter ended June 30, 2012.

Financial Highlights

Management Comments

"During the quarter, we performed well operationally and achieved several milestone events," said Carl Christenson, President and CEO. "We grew revenue by 14%, including 3% growth excluding acquisitions, while increasing operating income by 11%. We also initiated our first-ever quarterly dividend and earlier this week announced our second quarterly dividend. We also announced our intention to partially redeem Altra's 8.125% Notes. We generated $24.3 million in operating cash flow for the first half of the year as a result of strong working capital performance. We are also very excited about our recently announced acquisition of Brazil-based Lamiflex as part of our plan to acquire assets in key strategic regions that offer significant long-term growth profiles."

Business Outlook

"We are experiencing continuing strength across many of our end markets in North America and Asia and continue to take share by developing new products that are in direct alignment with customers' needs," said Christenson. "At the same time, as a result of the continued weakness in Europe we have accelerated our cost reduction and profit improvement plan across our European operations. We continue to expect to report year-over-year sales and profitability growth for full year 2012, but given the current economic conditions and uncertainty in Europe, and the expected negative effect of foreign currency translation on our revenue, we are revising our guidance for the remainder of the year."

The Company currently is forecasting sales in the range of $720 to $735 million and non-GAAP adjusted diluted EPS of $1.35 to $1.45 for 2012. Altra expects its tax rate for the full year to be approximately 32.0%, before discrete items, capital expenditures in the range of $30 to $35 million, and depreciation and amortization in the range of $25 to $28 million.

The Company will host an investor conference call to discuss its unaudited second-quarter financial results today, July 27, 2012, at 9:00 AM ET. The public is invited to listen to the conference call by dialing (877) 407-8293 domestically or (201) 689-8349 for international access and asking to participate in the ALTRA conference call. A live webcast of the call will be available in the "Investor Relations" section of www.altramotion.com. Individuals may download charts that will be used during the call at www.altramotion.com under "Events & Presentations" in the "Investor Relations" section. The charts will be available after earnings are released. A replay of the recorded conference call will be available at the conclusion of the call on July 27, through midnight on August 3, 2012. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (dial account #364 then replay ID # 397796). A webcast replay also will be available at www.altramotion.com.

                 
                 
Altra Holdings, Inc.  
                 
         
Consolidated Statements of Income Data: Quarter Ended   Year to Date Ended  
In Thousands of Dollars, except per share amounts June 30, 2012   July 2, 2011   June 30, 2012   July 2, 2011  
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)  
                 
Net sales  $ 187,943    $ 165,395    $ 380,328    $ 325,242  
Cost of sales 131,941   116,985   267,653   228,997  
Gross profit  $ 56,002    $ 48,410    $ 112,675    $ 96,245  
Gross profit as a percent of net sales 29.8%   29.3%   29.6%   29.6%  
Selling, general & administrative expenses  31,884    26,912    63,881    52,428  
Research and development expenses  2,942    2,426    5,969    4,743  
Income from operations  $ 21,176    $ 19,072    $ 42,825    $ 39,074  
Income from operations as a percent of net sales 11.3%   11.5%   11.3%   12.0%  
Interest expense, net  6,504    6,153    12,278    11,316  
Other non-operating expense (income), net  1,207    (599)    1,432    (885)  
                 
Income before income taxes  $ 13,465    $ 13,518    $ 29,115    $ 28,643  
Provision for income taxes  2,856    4,600    7,990    9,003  
Income tax rate 21.2%   34.0%   27.4%   31.4%  
Net income   $ 10,609    $ 8,918    $ 21,125    $ 19,640  
                 
                 
Weighted Average common shares outstanding                
Basic  26,606   26,491   26,541   26,491  
Diluted 26,664   26,613   26,674   26,657  
                 
Net income per share                
Basic  0.40    0.34    0.80    0.74  
Diluted  $ 0.40    $ 0.34    $ 0.79    $ 0.74  
                 
Reconciliation of Non-GAAP Adjusted Income From Operations:                
                 
Income from operations  $ 21,176    $ 19,072    $ 42,825    $ 39,074  
                 
Amortization of inventory fair value adjustment  --     581    --     581  
Acquisition related expenses  201    941    391    2,087  
Non-GAAP adjusted income from operations  $ 21,377    $ 20,594    $ 43,216    $ 41,742  
                 
Reconciliation of Non-GAAP Adjusted Net Income:                
                 
Net income   $ 10,609    $ 8,918    $ 21,125    $ 19,640  
                 
Amortization of inventory fair value adjustment  --     581    --     581  
Acquisition related expenses  201    941    391    2,087  
Premium accrued on the debt to be redeemed  630    --     630    --   
Tax impact of above adjustments  (266)    (457)    (326)    (827)  
Tax benefit from discrete items  --     --     --     (590)  
Non-GAAP adjusted net income  $ 11,174    $ 9,983    $ 21,820    $ 20,891  
                 
                 
Non-GAAP adjusted diluted earnings per share  $ 0.42  (1)  $ 0.38  (2)  $ 0.82  (3)  $ 0.79  (4)
                 
                 
(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 32.0% by the above items
(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 30.0% by the above items
(3) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.9% by the above items
(4) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 31.0% by the above items
     
   
Consolidated Balance Sheets  
In Thousands of Dollars June 30, 2012 December 31, 2011
   (unaudited)   
Assets:    
Current Assets    
Cash and cash equivalents  95,235  92,515
Trade Receivables, net  101,823  91,859
Inventories  120,973  125,970
Deferred income taxes  5,849  5,856
Income tax receivable  4,222  7,299
Prepaid expenses and other current assets  7,376  7,141
Total current assets  335,478  330,640
Property, plant and equipment, net  129,835  123,464
Intangible assets, net  73,328  77,108
Goodwill  83,257  83,799
Deferred income taxes  1,557  1,614
Other non-current assets, net  9,347  13,360
Total assets  $ 632,802  $ 629,985
     
Liabilities and stockholders' equity    
Current liabilities    
Accounts payable  43,184  52,768
Accrued payroll  18,593  19,734
Accruals and other current liabilities  32,743  28,798
Deferred income taxes  116  118
Current portion of long-term debt  21,475  688
Total current liabilities  116,111  102,106
Long-term debt, less current portion and net of unaccreted discount   240,194  263,361
Deferred income taxes  36,157  35,798
Pension liabilities  11,923  12,896
Other post retirement benefits  260  296
Long-term taxes payable  1,288  6,227
Other long-term liabilities  674  905
Total stockholders' equity  226,195  208,396
Total liabilities and stockholders' equity  $ 632,802  $ 629,985
     
     
     
  Year to Date Ended
  June 30,
2012
July 2,
2012
  (Unaudited) (Unaudited)
Cash flows from operating activities    
Net income   $ 21,125  $ 19,640
Adjustments to reconcile net income to net cash flows:    
 Depreciation   9,962  8,420
 Amortization of intangible assets  3,321  2,863
 Amortization of deferred financing costs  666  784
 Loss (gain) on foreign currency, net  340  (158)
 Accretion of debt discount, net  1,588  1,045
 Stock based compensation  1,543  1,374
 Changes in assets and liabilities:    
 Trade receivables  (13,198)  (22,275)
 Inventories  4,179  (8,318)
 Accounts payable and accrued liabilities  (2,751)  6,301
 Other current assets and liabilities  170  (625)
 Other operating assets and liabilities  (2,646)  (1,896)
 Net cash used in operating activities  24,299  7,155
Cash flows from investing activities    
Purchase of property, plant and equipment  (16,906)  (8,898)
Proceeds from sale of Chattanooga Facility  --  1,484
Acquisition of Bauer, net of $41 cash received  --  (62,291)
 Net cash used in investing activities  (16,906)  (69,705)
Cash flows from financing activities    
Payment of debt issuance costs   --  (3,414)
Proceeds from issuance of Convertible Notes  --  85,000
Redemption of Variable Rate Demand Revenue Bonds related to the San Marcos facility  (3,000)  --
Redemption of Variable Rate Demand Revenue Bonds related to the Chattanooga facility  --  (2,290)
Shares surrendered for tax withholdings  (57)  (65)
Payment on mortgages  (678)  (197)
Payments on capital leases  (228)  (400)
 Net cash (used in) provided by financing activities  (3,963)  78,634
Effect of exchange rate changes on cash and cash equivalents  (710)  1,680
 Net change in cash and cash equivalents  2,720  17,764
Cash and cash equivalents at beginning of year  92,515  72,723
Cash and cash equivalents at end of period  $ 95,235  $ 90,487
     
Reconciliation to free cash flow:    
Net cash used in operating activities  24,299  7,155
Purchase of property, plant and equipment  (16,906)  (8,898)
     
Free cash flow  $ 7,393  $ (1,743)
     

About Altra Holdings

Altra Holdings, Inc., through its wholly-owned subsidiary Altra Industrial Motion, Inc., is a leading multinational designer, producer and marketer of a wide range of electromechanical power transmission and motion control products. The company brings together strong brands covering over 40 product lines with production facilities in nine countries and sales coverage in over 70 countries. Our leading brands include Boston Gear, Warner Electric, TB Wood's, Formsprag Clutch, Ameridrives Couplings, Industrial Clutch, Kilian Manufacturing, Marland Clutch, Nuttall Gear, Stieber Clutch, Wichita Clutch, Twiflex Limited, Bibby Transmissions, Matrix International, Inertia Dynamics, Huco Dynatork, Warner Linear, Bauer Gear Motor and Lamiflex.

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

* Discussion of Non-GAAP Financial Measures

As used in this release and the accompanying slides posted on the Company's website, non-GAAP adjusted diluted earnings per share, non-GAAP adjusted income from operations and non-GAAP adjusted net income are each calculated using either net income or income from operations that excludes acquisition related costs, discrete tax items, amortization of inventory fair value adjustment, premium paid on the redemption of debt and other income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP adjusted diluted earnings per share is calculated by dividing non-GAAP adjusted net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from new cash provided by operating activities.

Altra believes that the presentation of non-GAAP adjusted net income, non-GAAP adjusted income from operations, non-GAAP adjusted diluted earnings per share and non-GAAP free cash flow provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations.

Forward-Looking Statements

All statements, other than statements of historical fact included in this release are forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Forward-looking statements can generally be identified by phrases such as "believes," "expects," "potential," "continues," "may," "should," "seeks," "predicts," "anticipates," "intends," "projects," "estimates," "plans," "could," "designed", "should be," and other similar expressions that denote expectations of future or conditional events rather than statements of fact. Forward-looking statements also may relate to strategies, plans and objectives for, and potential results of, future operations, financial results, financial condition, business prospects, growth strategy and liquidity, and are based upon financial data, market assumptions and management's current business plans and beliefs or current estimates of future results or trends available only as of the time the statements are made, which may become out of date or incomplete. Forward-looking statements are inherently uncertain, and investors must recognize that events could differ significantly from our expectations. These statements include, but may not be limited to, the Company's position regarding strength in its end markets and its taking of share from new products, the acceleration of cost reductions and profit improvement plans across its European operations, the Company's expectations regarding year-over-year sales and profitability growth, the Company's plan to acquire assets in key strategic regions that offer significant long-term growth profiles, the Company's intention to partially redeem Altra's 8.125% Notes, the negative effect of foreign currency translation on its revenue and the Company's guidance for 2012 for sales, EPS, capital expenditures, depreciation and amortization, and tax rate. 

In addition to the risks and uncertainties noted in this release, there are certain factors that could cause actual results to differ materially from those anticipated by some of the statements made. These include: (1) competitive pressures, (2) changes in economic conditions in the United States and abroad and the cyclical nature of our markets, (3) loss of distributors, (4) the ability to develop new products and respond to customer needs, (5) risks associated with international operations, including currency risks, (6) accuracy of estimated forecasts of OEM customers and the impact of the current global economic environment on our customers, (7) risks associated with a disruption to our supply chain, (8) fluctuations in the costs of raw materials used in our products, (9) product liability claims, (10) work stoppages and other labor issues, (11) changes in employment, environmental, tax and other laws and changes in the enforcement of laws, (12) loss of key management and other personnel, (13) changes in pension and retirement liabilities, (14) risks associated with compliance with environmental laws, (15) the ability to successfully execute, manage and integrate key acquisitions and mergers, (16) failure to obtain or protect intellectual property rights, (17) risks associated with impairment of goodwill or intangibles assets, (18) failure of operating equipment or information technology infrastructure, (19) risks associated with our debt leverage and operating covenants under our debt instruments, (20) risks associated with restrictions contained in our Senior Secured Notes and Convertible Notes, (21) risks associated with compliance with tax laws, (22) risks associated with the global recession and volatility and disruption in the global financial markets,  (23) risks associated with implementation of our new ERP system, (24) risks associated with the Bauer acquisition and integration, (25) risks associated with the Company's planned investment in a new manufacturing facility in China, and (26) other risks, uncertainties and other factors described in the Company's quarterly reports on Form 10-Q and annual reports on Form 10-K and in the Company's other filings with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by reference. Except as required by applicable law, Altra Holdings, Inc. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise. AIMC-E

CONTACT: Altra Holdings, Inc.

         Christian Storch, Chief Financial Officer

         781-917-0541

         Christian.storch@altramotion.com

Altra Holdings, Inc.

Source: Altra Holdings, Inc.

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