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Altra Industrial (AIMC) Tops on Q2 Earnings, Hikes '21 View

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Altra Industrial Motion Corp. (AIMC - Free Report) delivered better-than-expected results for second-quarter 2021. Its earnings surpassed estimates by 8.54%, whereas sales exceeded the same by 4.41%. The earnings beat is the company’s sixth consecutive quarter of healthy bottom-line results.

The machinery company’s non-GAAP earnings in the reported quarter were 89 cents per share, surpassing the Zacks Consensus Estimate of 82 cents. The bottom line increased 48.3% from the year-ago quarter’s 60 cents.

Revenue Details

In the reported quarter, Altra Industrial’s revenues were $488.6 million, reflecting an increase of 21.9% from the year-ago number.

Foreign currency translation had a positive impact of 4.7 percentage points. Organic sales in the reported quarter expanded 17.2%, driven by healthy business in the majority of the end-markets, including factory automation, heavy-duty trucks and specialty machinery.

Also, the company’s revenues surpassed the Zacks Consensus Estimate of $468 million.

On a geographical basis, the company’s organic sales expanded 27.3% year over year in North America and increased 17.4% in Europe. However, sales in the Asia Pacific/Rest of World decreased 2.9%.

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 $237.6 million, increasing 21% year over year. Organic sales in the quarter expanded 16.1% year over year.

Automation & Specialty’s sales were $252 million in the second quarter, up 22.4% from the year-ago reported quarter. Organic sales increased 18% from the year-ago quarter.

Margin Profile

In the reported quarter, Altra Industrial’s cost of sales increased 21.5% year over year to $312.7 million. Notably, cost of sales represented 64% of net sales. Non-GAAP gross profit was $175.9 million, up 22.7% year over year. Gross margin (non-GAAP) increased 20 basis points (bps) year over year to 36%.

Selling, general and administrative expenses (non-GAAP) increased 29.7% year over year to $75.2 million and represented 15.4% of net sales. Research and development expenses (non-GAAP) were $16.1 million versus $14 million in the year-ago quarter.

Non-GAAP adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $102.6 million, the margin being 21%. Non-GAAP operating income in the reported quarter increased 18.5% year over year to $84.6 million, with non-GAAP operating margin decreasing 50 bps to 17.3%.

Net interest expenses totaled $16.5 million in the reported quarter, reflecting a decrease of 12.2% from the year-ago quarter.

Balance Sheet & Cash Flow

Exiting the second quarter of 2021, Altra Industrial’s cash and cash equivalents were $277.8 million, increasing 11.4% from $249.4 million recorded in the last reported quarter. Long-term debt was $1,359.3 million, reflecting a 2.1% decline from $1,388.3 million in the last reported quarter.

In the first half of 2021, the company repaid $50 million of borrowings under its term-loan facility.

In the first half of 2021, it generated net cash of $100.1 million from operating activities, up 35.8% from the year-ago period. Capital invested for purchasing property, plant and equipment totaled $17.5 million, increasing 1.2% year over year. Non-GAAP free cash flow was $56 million versus $64.4 million in the year-ago quarter.


In the first half of 2021, the company paid out dividends amounting to $7.8 million, down from $22.3 million distributed in the prior-year period.

A couple of days before the earnings release, the company announced that its board of directors approved the payment of a quarterly dividend of 8 cents per share. The dividend payment for the third quarter will be made on Oct 4, 2021, to shareholders of record as of Sep 17, 2021.


Altra Industrial believes that a healthy demand environment will be advantageous in the second half of 2021. However, supply-chain issues along with inflation in raw materials, logistics and labor costs are worrying.

For 2021, the company increased its financial projections. Sales are now projected to be $1,890-$1,920 million, higher than $1,820-$1,850 million mentioned earlier.

Non-GAAP earnings are expected to be $3.30-$3.46, up from the previously stated $3.09-$3.24. Also, non-GAAP adjusted EBITDA is likely to be $395-$405 million, up from $380-$390 million stated earlier. The tax rate is still anticipated to be 21-22% versus 20-22.5% mentioned previously.

Cash flow from operations is expected to be $260-$290 million in 2021 (versus $250-$280 million stated earlier), while capital expenditure is likely to be $50-$55 million (maintained). Free cash flow (non-GAAP) is predicted to be $210-$235 million, up from $200-$225 million mentioned earlier.

Altra Industrial Motion Corp. Price, Consensus and EPS Surprise


Altra Industrial Motion Corp. Price, Consensus and EPS Surprise

Altra Industrial Motion Corp. price-consensus-eps-surprise-chart | Altra Industrial Motion Corp. Quote

Zacks Rank & Other Stocks to Consider

With a market capitalization of $4 billion, Altra Industrial currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the industry are Nordson Corporation (NDSN - Free Report) , The Middleby Corporation (MIDD - Free Report) and Applied Industrial Technologies, Inc. (AIT - Free Report) . While both Nordson and Middleby currently sport a Zacks Rank #1 (Strong Buy), Applied Industrial carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for the companies improved for the current year. Further, earnings surprise for the last reported quarter was 28.48% for Nordson, 9.82% for Middleby and 35.64% for Applied Industrial.