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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