Altra Industrial Motion Corp. reported better-than-expected results for first-quarter 2020. Its earnings surpassed estimates by 47.7% and sales topped the same by 5.5%.
The company noted that the coronavirus outbreak modestly impacted its first-quarter results.
The machinery company’s non-GAAP earnings in the reported quarter were 65 cents per share, surpassing the Zacks Consensus Estimate of 44 cents. However, the bottom line decreased 18.8% from the year-ago quarter figure of 80 cents.
Revenue Details
In the reported quarter, Altra Industrial’s revenues decreased 10.1% year over year to $434.2 million.
Forex woes had an adverse impact of 1.45% on the quarter’s sales. Also, organic sales declined 8.6% year over year due to weakness in several end markets — including transportation, distribution, mining, metals, agriculture, turf & garden, medical equipment, and oil & gas. Notably, business in renewable energy, factory automation & specialty machinery, and aerospace & defense markets improved in the quarter.
However, the company’s revenues surpassed the Zacks Consensus Estimate of $411.7 million.
Altra Industrial reports revenues under two heads — Automation & Specialty, and Power Transmission Technologies. A brief snapshot of the segmental sales is provided below:
Revenues generated from Power Transmission Technologies amounted to $216.7 million, declining 7.7% year over year.
Automation & Specialty’s sales were $218.6 million in the first quarter, down 12.2% from the last reported quarter.
Margin Profile
In the reported quarter, Altra Industrial’s cost of sales decreased 8.7% year over year to $281.2 million. Notably, cost of sales represented 64.8% of net sales versus 63.8% in the year-ago quarter. Non-GAAP gross profit was $153 million, down 12.5% year over year. Also, gross margin decreased 80 basis points (bps) to 35.2%.
Non-GAAP selling, general and administrative expenses decreased 3.4% year over year to $69.1 million and represented 15.9% of net sales. Research and development expenses were $14.8 million versus $15.3 million in the year-ago quarter.
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $85.9 million, the margin being 19.8%. However, non-GAAP operating income in the reported quarter declined 21.6% year over year to $69.1 million, with non-GAAP operating margin decreasing 230 bps to 15.9%.
Net interest expenses totaled $17.4 million in the reported quarter versus $19.8 million in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Altra Industrial’s cash and cash equivalents were $326.9 million, increasing 95.4% from $167.3 million recorded in the last reported quarter. Long-term debt was $1,658.5 million, reflecting a 6.1% increase from $1,563.8 million in the last reported quarter.
During the quarter, the company repaid $6 million of borrowing under its term-loan facility, while additional borrowing under its revolving facility totaled $100 million.
In the first quarter of 2020, it generated net cash of $34.9 million from operating activities, down 91.3% from the year-ago quarter. Capital invested for purchasing property, plant and equipment totaled $8.2 million, decreasing 41.4% year over year. Free cash flow was $26.7 million versus $25.3 million in the year-ago period.
Dividends
In the quarter, the company paid out dividends amounting to $11.3 million, slightly above $11.1 million distributed in the prior-year quarter.
Concurrently, the company announced that its board of directors has approved a 75% or 13 cents per share reduction in the quarterly dividend rate. The new payout rate is at 4 cents per share as compared with the previous rate of 17 cents. The payment will be made on Jul 6 to shareholders of record as of Jun 18, 2020.
It believes that the dividend reduction will help it save $30 million (annualized) cash, enhancing its liquidity in the present uncertain environment.
Outlook
Altra Industrial noted that cash generation, workers’ safety, providing services to customers, solid liquidity position and a healthy supply chain are its priorities at present. Despite this, it predicts the pandemic to affect its performance in 2020, as is visible from the revised projections for the year.
It expects sales of $1,540-$1,620 million versus the previously mentioned $1,720-$1,770 million for the year.
Non-GAAP earnings are expected to be $1.67-$2.03, down from $2.40-$2.60 per share stated earlier. Also, non-GAAP adjusted EBITDA is likely to be $281-$317 million (down from the earlier mentioned $340-$360 million). The tax rate is anticipated to be 21-23% (versus the previously stated 22-24%). Capital spending is expected to be down to $40-$45 million from $45-$50 million stated previously.
Altra Industrial Motion Corp. Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Altra Industrial Motion Corp. reported better-than-expected results for first-quarter 2020. Its earnings surpassed estimates by 47.7% and sales topped the same by 5.5%.
The company noted that the coronavirus outbreak modestly impacted its first-quarter results.
The machinery company’s non-GAAP earnings in the reported quarter were 65 cents per share, surpassing the Zacks Consensus Estimate of 44 cents. However, the bottom line decreased 18.8% from the year-ago quarter figure of 80 cents.
Revenue Details
In the reported quarter, Altra Industrial’s revenues decreased 10.1% year over year to $434.2 million.
Forex woes had an adverse impact of 1.45% on the quarter’s sales. Also, organic sales declined 8.6% year over year due to weakness in several end markets — including transportation, distribution, mining, metals, agriculture, turf & garden, medical equipment, and oil & gas. Notably, business in renewable energy, factory automation & specialty machinery, and aerospace & defense markets improved in the quarter.
However, the company’s revenues surpassed the Zacks Consensus Estimate of $411.7 million.
Altra Industrial reports revenues under two heads — Automation & Specialty, and Power Transmission Technologies. A brief snapshot of the segmental sales is provided below:
Revenues generated from Power Transmission Technologies amounted to $216.7 million, declining 7.7% year over year.
Automation & Specialty’s sales were $218.6 million in the first quarter, down 12.2% from the last reported quarter.
Margin Profile
In the reported quarter, Altra Industrial’s cost of sales decreased 8.7% year over year to $281.2 million. Notably, cost of sales represented 64.8% of net sales versus 63.8% in the year-ago quarter. Non-GAAP gross profit was $153 million, down 12.5% year over year. Also, gross margin decreased 80 basis points (bps) to 35.2%.
Non-GAAP selling, general and administrative expenses decreased 3.4% year over year to $69.1 million and represented 15.9% of net sales. Research and development expenses were $14.8 million versus $15.3 million in the year-ago quarter.
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $85.9 million, the margin being 19.8%. However, non-GAAP operating income in the reported quarter declined 21.6% year over year to $69.1 million, with non-GAAP operating margin decreasing 230 bps to 15.9%.
Net interest expenses totaled $17.4 million in the reported quarter versus $19.8 million in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the first quarter, Altra Industrial’s cash and cash equivalents were $326.9 million, increasing 95.4% from $167.3 million recorded in the last reported quarter. Long-term debt was $1,658.5 million, reflecting a 6.1% increase from $1,563.8 million in the last reported quarter.
During the quarter, the company repaid $6 million of borrowing under its term-loan facility, while additional borrowing under its revolving facility totaled $100 million.
In the first quarter of 2020, it generated net cash of $34.9 million from operating activities, down 91.3% from the year-ago quarter. Capital invested for purchasing property, plant and equipment totaled $8.2 million, decreasing 41.4% year over year. Free cash flow was $26.7 million versus $25.3 million in the year-ago period.
Dividends
In the quarter, the company paid out dividends amounting to $11.3 million, slightly above $11.1 million distributed in the prior-year quarter.
Concurrently, the company announced that its board of directors has approved a 75% or 13 cents per share reduction in the quarterly dividend rate. The new payout rate is at 4 cents per share as compared with the previous rate of 17 cents. The payment will be made on Jul 6 to shareholders of record as of Jun 18, 2020.
It believes that the dividend reduction will help it save $30 million (annualized) cash, enhancing its liquidity in the present uncertain environment.
Outlook
Altra Industrial noted that cash generation, workers’ safety, providing services to customers, solid liquidity position and a healthy supply chain are its priorities at present. Despite this, it predicts the pandemic to affect its performance in 2020, as is visible from the revised projections for the year.
It expects sales of $1,540-$1,620 million versus the previously mentioned $1,720-$1,770 million for the year.
Non-GAAP earnings are expected to be $1.67-$2.03, down from $2.40-$2.60 per share stated earlier. Also, non-GAAP adjusted EBITDA is likely to be $281-$317 million (down from the earlier mentioned $340-$360 million). The tax rate is anticipated to be 21-23% (versus the previously stated 22-24%). Capital spending is expected to be down to $40-$45 million from $45-$50 million stated previously.
Altra Industrial Motion Corp. Price, Consensus and EPS Surprise
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on SLGN - FREE
Get the latest research report on SGC - FREE