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Altra Industrial (AIMC) Beats Q3 Earnings, Narrows '16 View
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Machinery company Altra Industrial Motion Corporation reported better-than-expected results for third-quarter 2016, with a positive earnings surprise of 2.94%. In conjunction with the results, the company announced an acquisition deal and amendment to its credit facility.
Altra Industrial Motion’s non-GAAP earnings came in at 35 cents per share above the Zacks Consensus Estimate of 34 cents. However, the bottom line lagged the year-ago tally of 43 cents by 18.6%.
Altra Industrial Motion’s revenues in the quarter totaled $173.1 million, decreasing 5.4% year over year. The year-over-year fall was triggered by a 3.9% decline in organic revenues and 1.5% adverse impact from foreign currency translation.
However, the top line was on par with the Zacks Consensus Estimate of $173 million.
Altra Industrial Motion reports its revenues under the following heads/segments - Couplings Clutches & Brakes, Electromagnetic Clutches & Brakes, and Gearing. A brief snapshot of the segmental sales has been provided below:
Electromagnetic Clutches & Brakes revenues increased 0.6% year over year to $50.7 million. Couplings Clutches & Brakes sales were recorded at $77.4 million, down 9.7% year over year. Sales in the Gearing segment totaled $47.0 million, down 3.6% year over year.
Margins
In the quarter, Altra Industrial Motion’s cost of sales declined 6.5% year over year, representing 68.7% of revenue versus 69.5% in the year-ago quarter. Gross margin increased 80 basis points (bps) year over year to 31.3%. Selling, general and administrative expenses were roughly $36.1 million, accounting for 20.9% of revenues.
Balance Sheet & Cash Flow
Exiting the third quarter, Altra Industrial Motion’s cash and cash equivalents increased to $39.8 million from $34.3 million in the preceding quarter. Long-term debt was at $209.8 million, slightly below $210.5 million in the second quarter.
In nine months ended Sep 30, Altra Industrial Motion generated cash of $46.9 million from its operating activities, below the year-ago tally of $63.5 million. Cash used for the purchase of property, plant and equipment totaled $15.7 million, down from $19.2 million in the year-ago period. During the period, the company repurchased shares worth $4.7 million while paid dividends amounting to $7.8 million.
On Oct 19, Altra Industrial Motion, announced that its board of directors has approved a new share buyback program of upto $30 million, replacing its existing 2014-approved buyback program. Under the new authorization, the shares repurchased will be held as treasury shares, to be used for general corporate purposes, if required. Also on the same day, the company’s board of directors approved payment of a quarterly cash dividend of 15 cents per share. The payment will be made on Jan 4 to shareholders of record as on Dec 19.
Other Events Worth Considering
Acquisition: Altra Industrial Motion communicated its intention to acquire the Stromag business of GKN plc for approximately €184 million in cash and assumption of debt of €14 million. Subject to customary closing conditions, the deal is likely to complete in first-quarter 2017.
As revealed, Stromag is well-known for providing tailored-engineered solution to its customers in agricultural equipment, construction, marine, metal processing, renewable energy, crane & hoist and general industrial markets. Its product portfolio includes clutches and brakes, flexible couplings, limit switches and friction discs. Stromag’s revenue totaled roughly €131 million in 2015.
Altra Industrial Motion anticipates the acquired assets to be earnings accretive in 2017.
Credit Facility: Altra Industrial Motion announced to have agreed for amending its credit facility, to be effective after the closing of the Stromag acquisition. The company’s credit facility will increase by $75 million to $425 million. The incremental portion of the credit facility will be used for acquiring Stromag.
Outlook: For 2016, Altra Industrial Motion anticipates soft conditions to persist in its end-markets, while improvements are likely going into 2017. Expected improvements, as and when it happens, combined with benefits derived from consolidation, supply chain and operational initiatives will boost results.
Altra Industrial Motion has narrowed its guidance for 2016, with sales now expected within $705−$715 million. Previously, sales were guided within $700−$720 million range. Non-GAAP earnings now predicted to be $1.45−$1.50 per share versus $1.40−$1.50 per share expected earlier.
Tax rate is expected within roughly 29−31%. Capital expenditure will likely come in a band of $20−$24 million, while depreciation will be $30−$32 million.
In 2015, Altra Industrial Motion had initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with current demand levels. The company intends to lower the number of its facilities by 20−30% as well as improve its supply chain worldwide. These initiatives are expected to be completed by 2018. In the third quarter, the company had completed the closing of one facility, while another one will be closed in the fourth quarter.
Nordson Corporation’s financial performance has been impressive, with an average positive earnings surprise of 9.13% for the last four quarters. Also, earnings estimates for fiscal 2017 have been revised upward over the last 60 days.
Barnes Group reported better-than-expected results in the last quarter, with a positive earnings surprise of 6.78%. Also, bottom-line expectations for 2017 have improved over the past 60 days.
Chart Industries’ financial performance has been impressive, with an average positive earnings surprise of 428.37% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.
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Altra Industrial (AIMC) Beats Q3 Earnings, Narrows '16 View
Machinery company Altra Industrial Motion Corporation reported better-than-expected results for third-quarter 2016, with a positive earnings surprise of 2.94%. In conjunction with the results, the company announced an acquisition deal and amendment to its credit facility.
Altra Industrial Motion’s non-GAAP earnings came in at 35 cents per share above the Zacks Consensus Estimate of 34 cents. However, the bottom line lagged the year-ago tally of 43 cents by 18.6%.
Altra Industrial Motion’s revenues in the quarter totaled $173.1 million, decreasing 5.4% year over year. The year-over-year fall was triggered by a 3.9% decline in organic revenues and 1.5% adverse impact from foreign currency translation.
However, the top line was on par with the Zacks Consensus Estimate of $173 million.
Segmental Details
Altra Industrial Motion reports its revenues under the following heads/segments - Couplings Clutches & Brakes, Electromagnetic Clutches & Brakes, and Gearing. A brief snapshot of the segmental sales has been provided below:
Electromagnetic Clutches & Brakes revenues increased 0.6% year over year to $50.7 million. Couplings Clutches & Brakes sales were recorded at $77.4 million, down 9.7% year over year. Sales in the Gearing segment totaled $47.0 million, down 3.6% year over year.
Margins
In the quarter, Altra Industrial Motion’s cost of sales declined 6.5% year over year, representing 68.7% of revenue versus 69.5% in the year-ago quarter. Gross margin increased 80 basis points (bps) year over year to 31.3%. Selling, general and administrative expenses were roughly $36.1 million, accounting for 20.9% of revenues.
Balance Sheet & Cash Flow
Exiting the third quarter, Altra Industrial Motion’s cash and cash equivalents increased to $39.8 million from $34.3 million in the preceding quarter. Long-term debt was at $209.8 million, slightly below $210.5 million in the second quarter.
In nine months ended Sep 30, Altra Industrial Motion generated cash of $46.9 million from its operating activities, below the year-ago tally of $63.5 million. Cash used for the purchase of property, plant and equipment totaled $15.7 million, down from $19.2 million in the year-ago period. During the period, the company repurchased shares worth $4.7 million while paid dividends amounting to $7.8 million.
On Oct 19, Altra Industrial Motion, announced that its board of directors has approved a new share buyback program of upto $30 million, replacing its existing 2014-approved buyback program. Under the new authorization, the shares repurchased will be held as treasury shares, to be used for general corporate purposes, if required. Also on the same day, the company’s board of directors approved payment of a quarterly cash dividend of 15 cents per share. The payment will be made on Jan 4 to shareholders of record as on Dec 19.
Other Events Worth Considering
Acquisition: Altra Industrial Motion communicated its intention to acquire the Stromag business of GKN plc for approximately €184 million in cash and assumption of debt of €14 million. Subject to customary closing conditions, the deal is likely to complete in first-quarter 2017.
As revealed, Stromag is well-known for providing tailored-engineered solution to its customers in agricultural equipment, construction, marine, metal processing, renewable energy, crane & hoist and general industrial markets. Its product portfolio includes clutches and brakes, flexible couplings, limit switches and friction discs. Stromag’s revenue totaled roughly €131 million in 2015.
Altra Industrial Motion anticipates the acquired assets to be earnings accretive in 2017.
Credit Facility: Altra Industrial Motion announced to have agreed for amending its credit facility, to be effective after the closing of the Stromag acquisition. The company’s credit facility will increase by $75 million to $425 million. The incremental portion of the credit facility will be used for acquiring Stromag.
Outlook: For 2016, Altra Industrial Motion anticipates soft conditions to persist in its end-markets, while improvements are likely going into 2017. Expected improvements, as and when it happens, combined with benefits derived from consolidation, supply chain and operational initiatives will boost results.
Altra Industrial Motion has narrowed its guidance for 2016, with sales now expected within $705−$715 million. Previously, sales were guided within $700−$720 million range. Non-GAAP earnings now predicted to be $1.45−$1.50 per share versus $1.40−$1.50 per share expected earlier.
Tax rate is expected within roughly 29−31%. Capital expenditure will likely come in a band of $20−$24 million, while depreciation will be $30−$32 million.
In 2015, Altra Industrial Motion had initiated certain restructuring and cost-saving strategies to keep costs under control and align its business operations with current demand levels. The company intends to lower the number of its facilities by 20−30% as well as improve its supply chain worldwide. These initiatives are expected to be completed by 2018. In the third quarter, the company had completed the closing of one facility, while another one will be closed in the fourth quarter.
ALTRA INDUS MOT Price, Consensus and EPS Surprise
ALTRA INDUS MOT Price, Consensus and EPS Surprise | ALTRA INDUS MOT Quote
Zacks Rank & Stocks to Consider
With a market capitalization of $752.5 million, Altra Industrial Motion currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the machinery industry include Nordson Corporation (NDSN - Free Report) , Barnes Group (B - Free Report) and Chart Industries Inc. (GTLS - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Nordson Corporation’s financial performance has been impressive, with an average positive earnings surprise of 9.13% for the last four quarters. Also, earnings estimates for fiscal 2017 have been revised upward over the last 60 days.
Barnes Group reported better-than-expected results in the last quarter, with a positive earnings surprise of 6.78%. Also, bottom-line expectations for 2017 have improved over the past 60 days.
Chart Industries’ financial performance has been impressive, with an average positive earnings surprise of 428.37% for the last four quarters. Also, earnings estimates for 2016 and 2017 have been revised upward over the last 60 days.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>