It has been about a month since the last earnings report for Altra Industrial Motion . Shares have added about 12.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Altra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Altra Industrial Tops Q4 Earnings & Revenue Estimates
Altra Industrial reported better-than-expected fourth-quarter 2020 results with earnings surpassing estimates by 8.6%. This is the fourth consecutive quarter of earnings beat by the company. Also, its fourth-quarter sales beat estimates by 4.9%.
The machinery company’s non-GAAP earnings in the reported quarter were 76 cents per share, surpassing the Zacks Consensus Estimate of 70 cents. Also, the bottom line rose 15.2% from the year-ago quarter figure of 66 cents.
The company noted that it benefited from healthy demand in wind and Class 8 truck markets in China in the fourth quarter. Also, its cost-reduction measures in the quarter were encouraging.
In 2020, the company’s earnings came in at $2.88 per share, up 0.7% year over year.
Revenue Details
In the reported quarter, Altra Industrial’s revenues were $453.2 million, reflecting growth of 2.6% from the year-ago number.
Foreign currency translation had a positive impact of 2.3 percentage points. Also, organic sales grew 0.3% year over year, backed by strength in several end markets — including transportation, turf & garden, medical equipment, renewable energy, distribution, agriculture and defense. Notably, business in metals, mining and oil and gas declined in the quarter.
The company’s revenues surpassed the Zacks Consensus Estimate of $432 million.
In 2020, the company’s revenues were $1,726, down 5.9% year over year.
Altra Industrial reports revenues under two heads — Automation & Specialty, and Power Transmission Technologies. A brief snapshot of the segmental sales is provided below:
Quarterly revenues generated from Power Transmission Technologies amounted to $207.9 million, declining 5.1% year over year.
Automation & Specialty’s sales were $246.6 million in the fourth quarter, up 10.2% from the year-ago reported quarter.
Margin Profile
In the reported quarter, Altra Industrial’s cost of sales increased 2.4% year over year to $291.3 million. Notably, cost of sales represented 64.3% of net sales. Gross profit was $161.9 million, up 2.9% year over year. Gross margin increased 10 basis points (bps) to 35.7%.
Non-GAAP selling, general and administrative expenses decreased 1.6% year over year to $86.8 million and represented 19.2% of net sales. Research and development expenses were $15.2 million versus $14.7 million in the year-ago quarter.
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $96.1 million, the margin being 21.2%. Non-GAAP operating income in the reported quarter increased 7.2% year over year to $77.8 million, with non-GAAP operating margin increasing 80 bps to 17.2%.
Net interest expenses totaled $17.9 million in the reported quarter, reflecting an increase of 4.1% from the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Altra Industrial’s cash and cash equivalents were $254.4 million, increasing 6.6% from $238.7 million recorded in the last reported quarter. Long-term debt was $1,408.1 million, reflecting a 4.7% decline from $1,476.9 million in the last reported quarter.
During 2020, the company repaid $160 million of borrowing under its term-loan facility and $100 million under its revolving credit facility. Additional borrowing under its revolving facility totaled $100 million.
In 2020, the company generated net cash of $262.5 million from operating activities, up 2.5% from the year-ago. Capital invested for purchasing property, plant and equipment totaled $33.7 million, decreasing 34.8%. Non-GAAP adjusted free cash flow was $263.5 million versus $204.2 million a year ago.
Dividends
In 2020, the company paid out dividends amounting to $27.8 million, down from $44.4 million distributed in the prior year.
Outlook
Altra Industrial provided its financial projections for 2021. Sales are projected to be $1,790-$1,830 million.
Non-GAAP earnings are expected to be $2.95-$3.15. Also, non-GAAP adjusted EBITDA is likely to be $370-$385 million. The tax rate is still anticipated to be 20-23%. Capital spending is expected to be $45-$50 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Altra has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Altra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Altra (AIMC) Up 12.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Altra Industrial Motion . Shares have added about 12.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Altra due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Altra Industrial Tops Q4 Earnings & Revenue Estimates
Altra Industrial reported better-than-expected fourth-quarter 2020 results with earnings surpassing estimates by 8.6%. This is the fourth consecutive quarter of earnings beat by the company. Also, its fourth-quarter sales beat estimates by 4.9%.
The machinery company’s non-GAAP earnings in the reported quarter were 76 cents per share, surpassing the Zacks Consensus Estimate of 70 cents. Also, the bottom line rose 15.2% from the year-ago quarter figure of 66 cents.
The company noted that it benefited from healthy demand in wind and Class 8 truck markets in China in the fourth quarter. Also, its cost-reduction measures in the quarter were encouraging.
In 2020, the company’s earnings came in at $2.88 per share, up 0.7% year over year.
Revenue Details
In the reported quarter, Altra Industrial’s revenues were $453.2 million, reflecting growth of 2.6% from the year-ago number.
Foreign currency translation had a positive impact of 2.3 percentage points. Also, organic sales grew 0.3% year over year, backed by strength in several end markets — including transportation, turf & garden, medical equipment, renewable energy, distribution, agriculture and defense. Notably, business in metals, mining and oil and gas declined in the quarter.
The company’s revenues surpassed the Zacks Consensus Estimate of $432 million.
In 2020, the company’s revenues were $1,726, down 5.9% year over year.
Altra Industrial reports revenues under two heads — Automation & Specialty, and Power Transmission Technologies. A brief snapshot of the segmental sales is provided below:
Quarterly revenues generated from Power Transmission Technologies amounted to $207.9 million, declining 5.1% year over year.
Automation & Specialty’s sales were $246.6 million in the fourth quarter, up 10.2% from the year-ago reported quarter.
Margin Profile
In the reported quarter, Altra Industrial’s cost of sales increased 2.4% year over year to $291.3 million. Notably, cost of sales represented 64.3% of net sales. Gross profit was $161.9 million, up 2.9% year over year. Gross margin increased 10 basis points (bps) to 35.7%.
Non-GAAP selling, general and administrative expenses decreased 1.6% year over year to $86.8 million and represented 19.2% of net sales. Research and development expenses were $15.2 million versus $14.7 million in the year-ago quarter.
Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $96.1 million, the margin being 21.2%. Non-GAAP operating income in the reported quarter increased 7.2% year over year to $77.8 million, with non-GAAP operating margin increasing 80 bps to 17.2%.
Net interest expenses totaled $17.9 million in the reported quarter, reflecting an increase of 4.1% from the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the fourth quarter, Altra Industrial’s cash and cash equivalents were $254.4 million, increasing 6.6% from $238.7 million recorded in the last reported quarter. Long-term debt was $1,408.1 million, reflecting a 4.7% decline from $1,476.9 million in the last reported quarter.
During 2020, the company repaid $160 million of borrowing under its term-loan facility and $100 million under its revolving credit facility. Additional borrowing under its revolving facility totaled $100 million.
In 2020, the company generated net cash of $262.5 million from operating activities, up 2.5% from the year-ago. Capital invested for purchasing property, plant and equipment totaled $33.7 million, decreasing 34.8%. Non-GAAP adjusted free cash flow was $263.5 million versus $204.2 million a year ago.
Dividends
In 2020, the company paid out dividends amounting to $27.8 million, down from $44.4 million distributed in the prior year.
Outlook
Altra Industrial provided its financial projections for 2021. Sales are projected to be $1,790-$1,830 million.
Non-GAAP earnings are expected to be $2.95-$3.15. Also, non-GAAP adjusted EBITDA is likely to be $370-$385 million. The tax rate is still anticipated to be 20-23%. Capital spending is expected to be $45-$50 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Altra has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Altra has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.