- Revenue grew 27% to a record $145.5 million, driven by strong
demand in Industrial and Aerospace & Defense markets; Organic
growth was 25% on a constant currency basis
- Gross margin expanded 230 basis points to 31.5% on higher
volume and accretive acquisitions
- Operating income grew 167% to $11.4 million with a margin of
7.8%, which was up 410 basis points due to strong operating
leverage
- Net income more than doubled to $6.3 million or $0.39 per
diluted share
- Adjusted net income per share was $0.55, up 53% for the
quarter
Allied Motion Technologies Inc. (Nasdaq: AMOT) (“Allied Motion”
or “Company”), a designer and manufacturer of precision and
specialty controlled motion products and solutions for the global
market, today reported financial results for its first quarter
ended March 31, 2023. Results include the acquisitions completed
during the second quarter of 2022.
“We delivered record sales in the quarter as our global team
continued to execute our strategy and drive strong organic growth.
This level of performance speaks to the ability of our entire team
to execute at a very high level, and to our market diversification,
particularly within industries that demand precision controlled
motion solutions,” commented Dick Warzala, Chairman and CEO. “These
results translated into margin expansion and operating leverage,
despite ongoing macro challenges, and a measurably strengthened
bottom line with solid cash generation, which helped offset what is
typically a higher cash consumption quarter.
“2023 is off to a strong start, and while we are seeing some
pockets of weakness, especially in Europe, our overall demand
outlook is positive with a healthy backlog to continue to support
our growth. We expect our investments in technology and solutions,
as well as the further integration, rationalization and leveraging
of recent acquisitions, to continue to yield results we anticipated
and, over time, support an enhanced margin profile.”
First Quarter 2023 Results (Narrative compares with
prior-year period unless otherwise noted)
Revenue increased 27%, or $30.8 million, to a record $145.5
million and reflected higher demand across most target markets and
incremental revenue from recent acquisitions. Excluding the
unfavorable impact of foreign currency exchange rate fluctuations
on revenue of $3.3 million, revenue was up 30%, including organic
growth of 25%. Sales to U.S. customers were 56% of total sales for
the first quarter of 2023 and 2022, with the balance of sales to
customers primarily in Europe, Canada and Asia-Pacific. See the
attached table for a description of non-GAAP financial measures and
reconciliation of revenue excluding foreign currency exchange rate
fluctuations.
Aerospace & Defense revenue grew 125% due to organic growth,
defense program timing, and incremental demand from acquisitions.
Revenue from Industrial markets was up 38%, benefiting from strong
end market demand within industrial automation, oil & gas,
HVAC, and material handling. Medical market revenue was up 11% due
to higher demand within surgical-related markets and medical
mobility. Sales in the Vehicle markets were down 5%, as higher
commercial automotive demand was more than offset by lower demand
within agricultural vehicles. Sales through the Distribution
channel increased 10%.
Gross margin was 31.5%, up 230 basis points from the prior-year
period as higher volume, margin accretive acquisitions, and pricing
more than offset remaining supply chain disruptions and higher
material and labor costs.
Operating costs and expenses were 23.7% of revenue, down 170
basis points, which reflected the operating leverage obtained from
strong revenue growth. As a result, operating income increased to
$11.4 million compared with $4.3 million, and as a percent of
revenue was 7.8%, up 410 basis points.
Net income increased 152% to $6.3 million, or $0.39 per diluted
share, from $2.5 million, or $0.16 per share, in the prior-year
period. Adjusted net income, which excludes amortization of
intangible assets related to acquisitions, business development
costs and other non-recurring items, increased to $8.9 million, or
$0.55 per diluted share, compared with adjusted net income of $5.7
million, or $0.36 per diluted share. The effective tax rate was
23.2% in the first quarter of 2023, which reflected discrete tax
benefits in the period. The Company expects its income tax rate for
the full year 2023 to be approximately 25% to 27%. See the attached
tables for a description of non-GAAP financial measures and
reconciliation table for Adjusted Net Income and Diluted Earnings
per Share.
Earnings before interest, taxes, depreciation, amortization,
stock-based compensation expense, business development costs, and
foreign currency gains/losses (“Adjusted EBITDA”) was $19.0
million, up $6.1 million, or 47%. As a percentage of sales,
Adjusted EBITDA was 13.1%, up 190 basis points. The Company
believes that, when used in conjunction with measures prepared in
accordance with U.S. generally accepted accounting principles,
Adjusted EBITDA, which is a non-GAAP measure, helps in the
understanding of its operating performance. See the attached table
for a description of non-GAAP financial measures and reconciliation
table for Adjusted EBITDA.
Balance Sheet and Cash Flow Review
Cash and cash equivalents were $25.1 million compared with $30.6
million at year-end 2022. The change largely reflects a $6.25
million deferred payment made during the quarter for a prior
acquisition.
Cash provided by operating activities was $3.6 million compared
with cash usage of $13.4 million in the prior-year period, which
reflected higher net income and lower levels of inventory. Capital
expenditures were $3.6 million and largely focused on new customer
projects. The Company expects 2023 capital expenditures to be in
the range of $18 million to $23 million.
Total debt of $236.5 million was up $1.1 million from year-end
2022. Debt, net of cash, was $211.4 million, or 47.9% of net debt
to capitalization. The Company’s leverage ratio, as defined in its
credit agreement, was 3.30x at quarter-end.
Orders and Backlog Summary ($ in thousands)
Q1
2023
Q4
2022
Q3
2022
Q2
2022
Q1
2022
Orders
$
123,198
$
145,564
$
126,158
$
139,209
$
155,295
Backlog
$
308,635
$
330,078
$
310,186
$
323,873
$
289,295
Foreign currency translation had an unfavorable $3.3 million
impact on first quarter orders compared with the prior-year period.
The first quarter orders represented a book-to-bill ratio of
0.85x.
Backlog was up 7% over the prior year period, but decreased from
the sequential fourth quarter of 2022 reflecting the loosening of
some supply chain constraints. The time to convert the majority of
the backlog to sales is approximately three to nine months.
Conference Call and Webcast
The Company will host a conference call and webcast on Thursday,
May 4, 2023 at 10:00 am ET. During the conference call, management
will review the financial and operating results and discuss Allied
Motion’s corporate strategy and outlook. A question and answer
session will follow.
To listen to the live call, dial (412) 317-5185. In addition,
the webcast and slide presentation may be found at:
www.alliedmotion.com/investor-relations.
A telephonic replay will be available from 1:00 pm ET on the day
of the call through Thursday, May 11, 2023. To listen to the
archived call, dial (412) 317-6671 and enter replay pin number
10177270 or access the webcast replay via the Company’s website. A
transcript will also be posted to the website once available.
About Allied Motion Technologies Inc.
Allied Motion (Nasdaq: AMOT) designs, manufactures and sells
precision and specialty-controlled motion products and solutions
that are used in a broad range of applications within the
Industrial, Vehicle, Medical, and Aerospace & Defense Markets.
Headquartered in Amherst, NY, the Company has global operations and
sells into markets across the United States, Canada, South America,
Europe and Asia-Pacific.
Allied Motion is focused on controlled motion applications and
is known worldwide for its expertise in electro-magnetic,
mechanical, and electronic controlled motion technologies. Its
products include nano precision positioning systems, servo control
systems, motion controllers, digital servo amplifiers and drives,
brushless servo, torque, and coreless motors, brush motors,
integrated motor-drives, gear motors, gearing, incremental and
absolute optical encoders, active (electronic) and passive
(magnetic) filters for power quality and harmonic issues,
Industrial safety rated I/O Modules, Universal Industrial
Communications Gateways, light-weighting technologies, and other
controlled motion-related products.
The Company’s growth strategy is focused on becoming a leading
global controlled motion solution provider in its selected target
markets by further developing its products and services platform to
utilize multiple Allied Motion technologies which create increased
value solutions for its customers. The Company routinely posts news
and other important information on its website at
www.alliedmotion.com.
Safe Harbor Statement
The statements in this news release and in the Company’s May 4,
2023 conference call that relate to future plans, events or
performance are “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, without limitation, any
statement that may predict, forecast, indicate, or imply future
results, performance, or achievements. Examples of forward-looking
statements include, among others, statements the Company makes
regarding expected operating results, anticipated levels of capital
expenditures, the Company’s belief that it has sufficient liquidity
to fund its business operations, and expectations with respect to
the conversion of backlog to sales. Forward-looking statements are
neither historical facts nor assurances of future performance.
Instead, they are based only on the Company’s current beliefs,
expectations and assumptions regarding the future of the Company’s
business, future plans and strategies, projections, anticipated
events and trends, the economy and other future conditions. Because
forward-looking statements relate to the future, they are subject
to inherent uncertainties, risks and changes in circumstances that
are difficult to predict and many of which are outside of the
Company’s control. The Company’s actual results and financial
condition may differ materially from those indicated in the
forward-looking statements. Therefore, you should not rely on any
of these forward-looking statements. Important factors that could
cause our actual results and financial condition to differ
materially from those indicated in the forward-looking statements
include, among others, general economic and business conditions,
conditions affecting the industries served by the Company and its
subsidiaries, conditions affecting the Company's customers and
suppliers, competitor responses to the Company's products and
services, the overall market acceptance of such products and
services, the pace of bookings relative to shipments, the ability
to expand into new markets and geographic regions, the success in
acquiring new business, the impact of changes in income tax rates
or policies, the severity, magnitude and duration of the COVID-19
pandemic, including impacts of the pandemic and of businesses’ and
governments’ responses to the pandemic on our operations and
personnel, and on commercial activity and demand across our and our
customers’ businesses, and on global supply chains; our inability
to predict the extent to which the COVID-19 pandemic and related
impacts will continue to adversely impact our business operations,
financial performance, results of operations, financial position,
the prices of our securities and the achievement of our strategic
objectives, the ability to attract and retain qualified personnel,
the ability to successfully integrate an acquired business into our
business model without substantial costs, delays, or problems, and
other factors disclosed in the Company's periodic reports filed
with the Securities and Exchange Commission. Any forward-looking
statement speaks only as of the date on which it is made. New risks
and uncertainties arise over time, and it is not possible for us to
predict the occurrence of those matters or the manner in which they
may affect us. The Company has no obligation or intent to release
publicly any revisions to any forward looking statements, whether
as a result of new information, future events, or otherwise.
FINANCIAL TABLES FOLLOW
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per
share data)
(Unaudited)
For the three months
ended
March 31,
2023
2022
Revenue
$
145,549
$
114,785
Cost of goods sold
99,715
81,325
Gross profit
45,834
33,460
Operating costs and expenses:
Selling
6,032
5,031
General and administrative
14,820
11,496
Engineering and development
10,387
9,385
Business development
197
848
Amortization of intangible assets
3,009
2,434
Total operating costs and expenses
34,445
29,194
Operating income
11,389
4,266
Other expense, net:
Interest expense
2,983
1,038
Other expense, net
187
45
Total other expense, net
3,170
1,083
Income before income taxes
8,219
3,183
Income tax provision
(1,904
)
(679
)
Net income
$
6,315
$
2,504
Basic earnings per share:
Earnings per share
$
0.40
$
0.17
Basic weighted average common shares
15,872
15,096
Diluted earnings per share:
Earnings per share
$
0.39
$
0.16
Diluted weighted average common shares
16,137
15,599
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except per
share data)
March 31,
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
25,145
$
30,614
Trade receivables, net of provision for
credit losses of $1,122 and
$1,192 at March 31, 2023 and December 31,
2022, respectively
87,043
76,213
Inventories
116,229
117,108
Prepaid expenses and other assets
13,432
12,072
Total current assets
241,849
236,007
Property, plant, and equipment, net
69,127
68,640
Deferred income taxes
3,984
4,199
Intangible assets, net
116,027
119,075
Goodwill
126,567
126,366
Operating lease assets
23,432
22,807
Other long-term assets
9,947
11,253
Total Assets
$
590,933
$
588,347
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
41,151
$
39,467
Accrued liabilities
45,722
48,121
Total current liabilities
86,873
87,588
Long-term debt
236,506
235,454
Deferred income taxes
5,817
6,262
Pension and post-retirement
obligations
2,823
3,009
Operating lease liabilities
19,186
18,795
Other long-term liabilities
9,547
21,774
Total liabilities
360,752
372,882
Stockholders’ Equity:
Common stock, no par value, authorized
50,000 shares; 16,293
and 15,978 shares issued and outstanding
at March 31, 2023
and December 31, 2022, respectively
92,435
83,852
Preferred stock, par value $1.00 per
share, authorized 5,000
shares; no shares issued or
outstanding
—
—
Retained earnings
149,488
143,576
Accumulated other comprehensive loss
(11,742
)
(11,963
)
Total stockholders’ equity
230,181
215,465
Total Liabilities and Stockholders’
Equity
$
590,933
$
588,347
ALLIED MOTION TECHNOLOGIES
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
For the three months
ended
March 31,
2023
2022
Cash Flows From Operating
Activities:
Net income
$
6,315
$
2,504
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation and amortization
6,145
5,657
Deferred income taxes
(290
)
826
Stock-based compensation expense
1,267
1,349
Debt issue cost amortization recorded in
interest expense
75
35
Other
395
530
Changes in operating assets and
liabilities, net of acquisition:
Trade receivables
(10,587
)
(17,648
)
Inventories
1,340
(8,713
)
Prepaid expenses and other assets
(1,115
)
1,407
Accounts payable
1,548
2,113
Accrued liabilities
(1,507
)
(1,456
)
Net cash provided by (used in) operating
activities
3,586
(13,396
)
Cash Flows From Investing
Activities:
Consideration paid for acquisitions, net
of cash acquired
(6,250
)
185
Purchase of property and equipment
(3,554
)
(2,478
)
Net cash used in investing activities
(9,804
)
(2,293
)
Cash Flows From Financing
Activities:
Proceeds from issuance of long-term
debt
4,000
13,674
Principal payments of long-term debt and
finance lease obligations
(3,116
)
(3,316
)
Tax withholdings related to net share
settlements of restricted stock
(146
)
(137
)
Net cash provided by financing
activities
738
10,221
Effect of foreign exchange rate changes on
cash
11
(76
)
Net decrease in cash and cash
equivalents
(5,469
)
(5,544
)
Cash and cash equivalents at beginning of
period
30,614
22,463
Cash and cash equivalents at end of
period
$
25,145
$
16,919
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of Non-GAAP Financial Measures (In
thousands) (Unaudited)
In addition to reporting revenue and net income, which are U.S.
generally accepted accounting principle (“GAAP”) measures, the
Company presents Revenue excluding foreign currency exchange rate
impacts, and EBITDA and Adjusted EBITDA (earnings before interest,
income taxes, depreciation and amortization, stock-based
compensation expense, business development costs, and foreign
currency gains/losses), which are non-GAAP measures.
The Company believes that Revenue excluding foreign currency
exchange rate impacts is a useful measure in analyzing organic
sales results. The Company excludes the effect of currency
translation from revenue for this measure because currency
translation is not under management’s control, is subject to
volatility and can obscure underlying business trends. The portion
of revenue attributable to currency translation is calculated as
the difference between the current period revenue and the current
period revenue after applying foreign exchange rates from the prior
period.
The Company believes EBITDA and Adjusted EBITDA are often a
useful measure of a Company’s operating performance and are a
significant basis used by the Company’s management to evaluate and
compare the core operating performance of its business from period
to period by removing the impact of the capital structure
(interest), tangible and intangible asset base (depreciation and
amortization), taxes, stock-based compensation expense, business
development costs, foreign currency gains/losses on short-term
assets and liabilities, and other items that are not indicative of
the Company’s core operating performance. EBITDA and Adjusted
EBITDA do not represent and should not be considered as an
alternative to net income, operating income, net cash provided by
operating activities or any other measure for determining operating
performance or liquidity that is calculated in accordance with
GAAP.
The Company’s calculation of Revenue excluding foreign currency
exchange impacts for the three months ended March 31, 2023 is as
follows:
Three Months Ended
March 31, 2023
Revenue as reported
$
145,549
Foreign currency impact
3,252
Revenue excluding foreign currency
exchange impacts
$
148,801
The Company’s calculation of Adjusted EBITDA for the three
months ended March 31, 2023 and 2022 is as follows:
Three Months Ended
March 31,
2023
2022
Net income
$
6,315
$
2,504
Interest expense
2,983
1,038
Provision for income tax
1,904
679
Depreciation and amortization
6,145
6,435
EBITDA
17,347
10,656
Stock compensation expense
1,267
1,349
Foreign currency loss
214
50
Business development costs
197
848
Adjusted EBITDA
$
19,025
$
12,903
ALLIED MOTION TECHNOLOGIES INC.
Reconciliation of GAAP Net Income and Diluted Earnings per Share
to Non-GAAP Adjusted Net Income and Adjusted Diluted
Earnings per Share (In thousands, except per share data)
(Unaudited)
The Company’s calculation of Adjusted net income and Adjusted
diluted earnings per share for the three months ended March 31,
2023 and 2022 is as follows:
Three Months Ended
March 31,
2023
Per diluted share
2022
Per diluted share
Net income as reported
$
6,315
$
0.39
$
2,504
$
0.16
Non-GAAP adjustments, net of tax (1)
Amortization of intangible assets -
net
2,305
0.14
2,460
0.16
Foreign currency gain/ loss - net
164
0.01
38
0.00
Business development costs - net
151
0.01
650
0.04
Adjusted net income and adjusted diluted
EPS
$
8,935
$
0.55
$
5,652
$
0.36
Weighted average diluted shares
outstanding
16,137
15,599
_______________________________
(1)
Applies a blended federal, state, and
foreign tax rate of approximately 23% applicable to the non-GAAP
adjustments.
Adjusted net income and diluted EPS are defined as net income as
reported, adjusted for certain items, including amortization of
intangible assets and unusual non-recurring items. Adjusted net
income and diluted EPS are not a measure determined in accordance
with GAAP in the United States, and may not be comparable to the
measure as used by other companies. Nevertheless, the Company
believes that providing non-GAAP information, such as adjusted net
income and diluted EPS are important for investors and other
readers of the Company’s financial statements and assists in
understanding the comparison of the current quarter’s and current
year’s net income and diluted EPS to the historical periods’ net
income and diluted EPS.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005890/en/
Investor Contact: Deborah K. Pawlowski / Craig P.
Mychajluk Kei Advisors LLC 716-843-3908 / 716-843-3832
dpawlowski@keiadvisors.com cmychajluk@keiadvisors.com
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