Altra Industrial Motion
Altra Industrial Motion Corp. (Form: 8-K, Received: 07/25/2017 07:13:52)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

June 30, 2017

Date of Report (Date of earliest event reported)

 

ALTRA INDUSTRIAL MOTION CORP.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

001-33209

 

61-1478870

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

 

 

 

 

300 Granite Street, Suite 201

Braintree, Massachusetts

 

02184

(Address of principal executive offices)

 

(Zip Code)

(781) 917-0600

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

 

 

 


 

Item 2.02

Results of Operations and Financial Condition

On July 25, 2017, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the quarter ended June 30, 2017. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On July 25, 2017, the Company will hold a conference call with investors to discuss unaudited results for the quarter ended June 30, 2017. The chart presentation to be used during the call is attached hereto as Exhibit 99.2 to this report and is incorporated by reference herein.

Item 9.01

Financial Statements and Exhibits

(d) Exhibits

 

99.1

  

Press release of Altra Industrial Motion Corp., dated July 25, 2017.

 

 

99.2

 

Charts to be used during the investor conference call on July 25, 2017.

 

 


 

 

EXHIBIT

INDEX

 

 

 

 

99.1

  

Press release of Altra Industrial Motion Corp., dated July 25, 2017.

 

 

99.2

 

Charts to be used during the investor conference call on July 25, 2017.

 

 


 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

ALTRA INDUSTRIAL MOTION CORP.

 

/s/ Carl R. Christenson

Name:

  

Carl R. Christenson

Title:

 

Chairman and Chief Executive Officer

Date: July 25, 2017

 

 

 

Exhibit 99.1

 

Altra Reports Second-Quarter 2017 Results

Achieves Record Sales and Record GAAP EPS

Profitability Outpaces Strong Sales Growth as Strategic Initiatives Benefit Bottom Line

Company Raises Full-Year Guidance

 

BRAINTREE, Mass., July 25, 2017 -  Altra Industrial Motion Corp (Nasdaq: AIMC), a global manufacturer and marketer of electromechanical power transmission and motion control products, today announced unaudited financial results for the second quarter ended June 30, 2017.

Financial Highlights

 

Second-quarter 2017 net sales were $223.4 million, up 22.3% from $182.7 million in the second quarter of 2016. Excluding the impact of the Stromag acquisition, second-quarter 2017 net sales were up 4.0% from the same quarter of 2016.

 

Gross margin increased 40 basis points year over year to 32.3%.  

 

Operating margin increased 150 basis points year over year to 10.4%.

 

Second-quarter net income was $15.4 million, or $0.53 per diluted share, compared with $9.3 million, or $0.36 per diluted share, in the second quarter of 2016.

 

Non-GAAP net income in Q2 2017 was $16.6 million, or $0.57 per diluted share, compared with $10.9 million, or $0.42 per diluted share, a year ago.*  

 

Cash flow from operations of $26.0 million led to free cash flow of $11.5 million for the year to date period. *

 

*Reconciliation of Non-GAAP Net Income:

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

Year to Date Ended

 

 

June 30, 2017

 

 

June 30, 2016

 

 

June 30, 2017

 

 

June 30, 2016

 

Net Income

$

15,384

 

 

$

9,349

 

 

$

25,710

 

 

$

18,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and consolidation costs

$

1,198

 

 

$

1,641

 

 

$

3,096

 

 

$

3,194

 

Legal fees associated with pursuit of unfair trade remedy

 

-

 

 

 

534

 

 

 

-

 

 

 

534

 

Loss on extinguishment of convertible debt

 

-

 

 

 

-

 

 

 

1,797

 

 

 

-

 

Amortization of inventory fair value adjustment

 

-

 

 

 

-

 

 

 

2,347

 

 

 

-

 

Acquisition related expenses

 

568

 

 

 

-

 

 

 

1,566

 

 

 

-

 

Tax impact of above adjustments

 

(529

)

 

 

(632

)

 

 

(2,620

)

 

 

(1,096

)

Non-GAAP net income*

$

16,621

 

 

$

10,892

 

 

$

31,896

 

 

$

20,791

 

Non-GAAP diluted earnings per share*

$

0.57

 

 

$

0.42

 

 

$

1.10

 

 

$

0.80

 

 


*Reconciliation of Free Cash Flow

Year to Date Ended

 

 

June 30, 2017

 

 

June 30, 2016

 

Net cash flows from operating activities

$

25,956

 

 

$

30,532

 

Purchase of property, plant and equipment

 

(14,416

)

 

 

(10,861

)

 

 

Free cash flow*

$

11,540

 

 

$

19,671

 

In Thousands of Dollars, except per share amounts

 

 

 

 

 

 

 

 

Management Comments

“We turned in an excellent performance during the second quarter, reporting record sales, record GAAP EPS, and record non-GAAP EPS” said Carl Christenson, Altra's Chairman and CEO. “We are seeing ongoing improvement in certain of our end markets that had been challenged, including oil and gas and mining, and we are leveraging that healthier demand environment with a lower cost structure. As a result, we achieved a 47% increase in GAAP EPS, a 36% increase in non-GAAP EPS, a 40 basis point increase in gross margin and a 150 basis point increase in operating margin.”

Business Outlook

“Although incoming orders moderated somewhat from the first to second quarter, we are optimistic that the upturn in certain of our end markets will continue to take hold,” said Christenson. “As our markets strengthen, we expect to benefit increasingly from our work during the past few years on consolidation, supply chain and operational excellence initiatives. We also are encouraged by the progress of our Stromag acquisition, where we already experienced strong cross-selling opportunities in the second quarter. We continue to seek further acquisitions, but remain highly disciplined in that pursuit. As a result of our success thus far in 2017, we are raising our guidance for full year 2017, and look forward to the solid execution of our strategic plan during the second half of the year.”

Altra is raising its top and bottom line guidance for full year 2017, given that the Company’s performance in the first half of the year exceeded its expectations and improvement in certain of its end markets is expected to continue. Altra now expects full-year 2017 sales in the range of $850 to $865 million, net income in the range of $50.5 to $53.5 million and non-GAAP net income in the range of $56.7 to $59.7 million, GAAP diluted EPS in the range of $1.74 to $1.84, and non-GAAP diluted EPS guidance in the range of $1.95 to $2.05. The Company now expects its tax rate for the full year to be approximately 29% to 31% before discrete items, capital expenditures in the range of $25 to $30 million, and depreciation and amortization in the range of $35 to $37 million.*


 

 

 

 

 

 

 

*Reconciliation of 2017 Non-GAAP Net Income and Diluted EPS Guidance (Amounts in millions except per share information)

 

Fiscal Year 2017

 

 

Fiscal Year 2017 Diluted earnings per share

 

 

 

 

 

 

 

Net Income

 

$50.5 - $53.5

 

 

$1.74 - $1.84

Adjustments (1)

 

 

 

 

 

 

 

 

Restructuring and consolidation costs

 

 

3.1

 

 

 

 

 

Acquisition related expenses

 

 

1.6

 

 

 

 

 

Amortization of inventory fair value adjustment

 

 

2.3

 

 

 

 

 

Loss on extinguishment of debt

 

 

1.8

 

 

 

 

 

Tax impact of above adjustments (2)

 

 

(2.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income

 

$56.7 - $59.7

 

 

$1.95 - $2.05

 

 

 

 

 

 

 

 

 

(1) Adjustments are pre-tax, with net tax impact listed separately

 

 

 

 

 

 

 

 

(2) Tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.9% by the above items.

 

Conference Call

The Company will conduct an investor conference call to discuss its unaudited second-quarter 2017 financial results today, July 25, at 10:00 a.m. ET. The public is invited to listen to the conference call by dialing (877) 407-8293 domestically or (201) 689-8349 for international access. 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 through midnight on August 8, 2017. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (conference ID # 13666119). A webcast replay also will be available.

 


Altra Industrial Motion Corp.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statements of Income Data:

Quarter Ended

 

 

 

 

Year to Date Ended

 

 

 

 

In Thousands of Dollars, except per share amounts

June 30, 2017

 

 

 

 

June 30, 2016

 

 

 

 

June 30, 2017

 

 

 

 

June 30, 2016

 

 

 

 

 

(Unaudited)

 

 

 

 

(Unaudited)

 

 

 

 

(Unaudited)

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

$

223,357

 

 

 

 

$

182,674

 

 

 

 

$

438,792

 

 

 

 

$

363,127

 

 

 

 

Cost of sales

 

151,231

 

 

 

 

 

124,474

 

 

 

 

 

300,499

 

 

 

 

 

250,297

 

 

 

 

Gross profit

$

72,126

 

 

 

 

$

58,200

 

 

 

 

$

138,293

 

 

 

 

$

112,830

 

 

 

 

Gross profit as a percent of net sales

 

32.3

%

 

 

 

 

31.9

%

 

 

 

 

31.5

%

 

 

 

 

31.1

%

 

 

 

Selling, general & administrative expenses

 

41,619

 

 

 

 

 

35,870

 

 

 

 

 

82,003

 

 

 

 

 

69,406

 

 

 

 

Research and development expenses

 

6,160

 

 

 

 

 

4,514

 

 

 

 

 

12,383

 

 

 

 

 

9,078

 

 

 

 

Restructuring Charges

 

1,198

 

 

 

 

 

1,641

 

 

 

 

 

3,096

 

 

 

 

 

3,194

 

 

 

 

Income from operations

$

23,149

 

 

 

 

$

16,175

 

 

 

 

$

40,811

 

 

 

 

$

31,152

 

 

 

 

Income from operations as a percent of net sales

 

10.4

%

 

 

 

 

8.9

%

 

 

 

 

9.3

%

 

 

 

 

8.6

%

 

 

 

Interest expense, net

 

2,031

 

 

 

 

 

2,904

 

 

 

 

 

3,736

 

 

 

 

 

5,800

 

 

 

 

Other non-operating income, net

 

(136

)

 

 

 

 

(205

)

 

 

 

 

(666

)

 

 

 

 

(483

)

 

 

 

Loss on extinguishment of convertible debt

 

-

 

 

 

 

 

-

 

 

 

 

 

1,797

 

 

 

 

 

-

 

 

 

 

Income before income taxes

$

21,254

 

 

 

 

$

13,476

 

 

 

 

$

35,944

 

 

 

 

$

25,835

 

 

 

 

Provision for income taxes

 

5,870

 

 

 

 

 

4,127

 

 

 

 

 

10,234

 

 

 

 

 

7,676

 

 

 

 

Income tax rate

 

27.6

%

 

 

 

 

30.6

%

 

 

 

 

28.5

%

 

 

 

 

29.7

%

 

 

 

Net income

 

15,384

 

 

 

 

 

9,349

 

 

 

 

 

25,710

 

 

 

 

 

18,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

28,978

 

 

 

 

 

25,699

 

 

 

 

 

28,873

 

 

 

 

 

25,699

 

 

 

 

Diluted

 

29,114

 

 

 

 

 

25,968

 

 

 

 

 

29,042

 

 

 

 

 

25,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.53

 

 

 

 

$

0.36

 

 

 

 

$

0.89

 

 

 

 

$

0.71

 

 

 

 

Diluted

$

0.53

 

 

 

 

$

0.36

 

 

 

 

$

0.89

 

 

 

 

$

0.70

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Income From Operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

$

23,149

 

 

 

 

$

16,175

 

 

 

 

$

40,811

 

 

 

 

$

31,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and consolidation costs

 

1,198

 

 

 

 

 

1,641

 

 

 

 

 

3,096

 

 

 

 

 

3,194

 

 

 

 

Amortization of inventory fair value adjustment

 

-

 

 

 

 

 

-

 

 

 

 

 

2,347

 

 

 

 

 

-

 

 

 

 

Legal fees associated with pursuit of unfair trade remedy

 

-

 

 

 

 

 

534

 

 

 

 

 

-

 

 

 

 

 

534

 

 

 

 

Acquisition related expenses

 

568

 

 

 

 

 

-

 

 

 

 

 

1,566

 

 

 

 

 

-

 

 

 

 

Non-GAAP income from operations *

$

24,915

 

 

 

 

$

18,350

 

 

 

 

$

47,820

 

 

 

 

$

34,880

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Non-GAAP Net Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Altra Industrial Motion Corp.

$

15,384

 

 

 

 

$

9,349

 

 

 

 

$

25,710

 

 

 

 

$

18,159

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring and consolidation costs

 

1,198

 

 

 

 

 

1,641

 

 

 

 

 

3,096

 

 

 

 

 

3,194

 

 

 

 

Loss on extinguishment of convertible debt

 

-

 

 

 

 

 

-

 

 

 

 

 

1,797

 

 

 

 

 

-

 

 

 

 

Legal fees associated with pursuit of unfair trade remedy

 

-

 

 

 

 

 

534

 

 

 

 

 

-

 

 

 

 

 

534

 

 

 

 

Amortization of inventory fair value adjustment

 

-

 

 

 

 

 

-

 

 

 

 

 

2,347

 

 

 

 

 

-

 

 

 

 

Acquisition related expenses

 

568

 

 

 

 

 

-

 

 

 

 

 

1,566

 

 

 

 

 

-

 

 

 

 

Tax impact of above adjustments

 

(529

)

 

 

 

 

(632

)

 

 

 

 

(2,620

)

 

 

 

 

(1,096

)

 

 

 

Non-GAAP net income *

$

16,621

 

 

 

 

$

10,892

 

 

 

 

$

31,896

 

 

 

 

$

20,791

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP diluted earnings per share *

$

0.57

 

 

(1

)

$

0.42

 

 

(2

)

$

1.10

 

 

(3

)

$

0.80

 

 

(4

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.9% by the above items

 

(2) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.1% by the above items

 

(3) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.8% by the above items

 

(4) - tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.4% by the above items

 

 


 

 

 

 

 

 

 

 

Consolidated Balance Sheets

 

 

In Thousands of Dollars

June 30, 2017

 

 

December 31, 2016

 

 

(unaudited)

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and cash equivalents

$

58,981

 

 

$

69,118

 

Trade receivables, net

 

137,797

 

 

 

120,319

 

Inventories

 

142,696

 

 

 

139,840

 

Income tax receivable

 

6,417

 

 

 

607

 

Prepaid expenses and other current assets

 

14,891

 

 

 

10,429

 

Assets held for sale

 

3,967

 

 

 

3,874

 

Total current assets

 

364,749

 

 

 

344,187

 

Property, plant and equipment, net

 

185,034

 

 

 

177,043

 

Intangible assets, net

 

158,766

 

 

 

154,683

 

Goodwill

 

198,986

 

 

 

188,841

 

Deferred income taxes

 

1,363

 

 

 

2,510

 

Other non-current assets, net

 

2,189

 

 

 

2,560

 

Total assets

$

911,087

 

 

$

869,824

 

 

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable

$

57,451

 

 

$

60,845

 

Accrued payroll

 

26,736

 

 

 

31,302

 

Accruals and other current liabilities

 

40,129

 

 

 

35,080

 

Income tax payable

 

7,740

 

 

 

706

 

Current portion of long-term debt

 

371

 

 

 

43,690

 

Total current liabilities

 

132,427

 

 

 

171,623

 

Long-term debt, less current portion

 

308,009

 

 

 

325,969

 

Deferred income taxes

 

56,132

 

 

 

61,084

 

Pension liabilities

 

26,288

 

 

 

23,691

 

Other long-term liabilities

 

19,452

 

 

 

4,109

 

Total stockholders' equity

 

368,779

 

 

 

283,348

 

Total liabilities, and stockholders' equity

$

911,087

 

 

$

869,824

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to operating working capital:

 

 

 

 

 

 

 

Trade receivables, net

 

137,797

 

 

 

120,319

 

Inventories

 

142,696

 

 

 

139,840

 

Accounts payable

 

(57,451

)

 

 

(60,845

)

Operating working capital *

$

223,042

 

 

$

199,314

 

 


 

 

Year to Date Ended

 

 

 

June 30, 2017

 

 

June 30, 2016

 

 

 

(Unaudited)

 

 

(Unaudited)

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net income

 

$

25,710

 

 

$

18,159

 

Adjustments to reconcile net income to net cash flows:

 

 

 

 

 

 

 

 

Depreciation

 

 

12,930

 

 

 

10,487

 

Amortization of intangible assets

 

 

4,685

 

 

 

4,262

 

Amortization of deferred financing costs

 

 

299

 

 

 

393

 

Loss/(Gain) on foreign currency, net

 

 

132

 

 

 

(100

)

Accretion of debt discount, net

 

 

 

 

 

1,962

 

(Gain)/loss on disposal / impairment of fixed assets

 

 

(74

)

 

 

411

 

Loss on extinguishment of debt

 

 

1,797

 

 

 

 

Stock based compensation

 

 

3,153

 

 

 

2,312

 

Amortization of inventory fair value adjustment

 

 

2,347

 

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Trade receivables

 

 

(12,812

)

 

 

(8,890

)

Inventories

 

 

(1,473

)

 

 

238

 

Accounts payable and accrued liabilities

 

 

(9,212

)

 

 

1,470

 

Other current assets and liabilities

 

 

(1,146

)

 

 

(698

)

Other operating assets and liabilities

 

 

(380

)

 

 

526

 

Net cash provided by operating activities

 

 

25,956

 

 

 

30,532

 

Cash flows from investing activities

 

 

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(14,416

)

 

 

(10,861

)

Working capital settlement from prior year acquisitions

 

 

2,883

 

 

 

 

Net cash used in investing activities

 

 

(11,533

)

 

 

(10,861

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Payments on Revolving Credit Facility

 

 

(24,054

)

 

 

(26,507

)

Dividend payments

 

 

(8,300

)

 

 

(3,903

)

Borrowing under Revolving Credit Facility

 

 

5,000

 

 

 

 

Payments of equipment, working capital notes, mortgages and other debt

 

 

(505

)

 

 

(2,545

)

Cash paid for convertible debt

 

 

(954

)

 

 

 

Proceeds from mortgages and other debt

 

 

 

 

 

3,112

 

Shares surrendered for tax withholding

 

 

(386

)

 

 

(103

)

Purchases of common stock under share repurchase program

 

 

 

 

 

(4,391

)

Net cash used in financing activities

 

 

(29,199

)

 

 

(34,337

)

Effect of exchange rate changes on cash and cash equivalents

 

 

4,639

 

 

 

(1,324

)

Net change in cash and cash equivalents

 

 

(10,137

)

 

 

(15,990

)

Cash and cash equivalents at beginning of year

 

 

69,118

 

 

 

50,320

 

Cash and cash equivalents at end of period

 

$

58,981

 

 

$

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