Altra Industrial (AIMC) Tops Q2 Earnings, Revenues, Ups View
Zacks Investment Research | Jul 26, 2017 10:14PM ET
Machinery company Altra Industrial Motion Corporation (NASDAQ:AIMC) reported impressive results for second-quarter 2017, with earnings and revenues surpassing their respective Zacks Consensus Estimate by 11.76% and 1.15%.
The quarter’s non-GAAP earnings of 57 cents per share topped the Zacks Consensus Estimate of 51 cents. Also, the bottom line increased 35.7% from the year-ago quarter’s tally of 42 cents.
Revenues totaled $223.4 million, increasing 22.3% year over year. The improvement was triggered by 4% growth in organic revenues and 18.3% positive impact from the Stromag acquisition.
Also, the top line was above the Zacks Consensus Estimate of $221 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:
Revenues generated from Electromagnetic Clutches & Brakes segment were $8.16 million, up 15.5% year over year.
Couplings Clutches & Brakes segment’s sales were $12 million, surging 58.9% from the year-ago quarter.
Gearing segment’s revenues inched up 0.1% year over year to $49.1 million.
Margins
In the quarter, Altra Industrial Motion’s margins profile improved on the back of revenue growth, partially offset by costs and operating expenses. Cost of sales increased 21.5% year over year while as a percentage of revenues it represented 67.7% versus 68.1% in the year-ago quarter. Gross margin improved 40 basis points (bps) to 32.3%. Selling, general and administrative expenses were roughly $41.6 million, accounting for 18.6% of revenues.
Non-GAAP operating margin in the quarter was 11.2% versus 10% in the year-ago quarter.
Balance Sheet & Cash Flow
Exiting the second quarter, Altra Industrial Motion’s cash and cash equivalents were $59 million, up from $52.9 million in the preceding quarter. Long-term debt was $308 million, down 3% sequentially.
In the first half of 2017, the company’s net cash generated from operating activities fell roughly 15% year over year to $26 million. Capital spending was $14.4 million, up from $10.9 million in the year-ago period. During the period, the company paid dividends amounting to $8.3 million.
Outlook
For 2017, Altra Industrial Motion anticipates benefiting from the steadily improving end-markets, savings from cost-reduction initiatives and synergistic benefits from the Stromag acquisition. On the back of these expectations as well as impressive first-half results, the company increased its revenue guidance to $850–$865 million from the previous projection of $840–$855 million.
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Non-GAAP earnings are anticipated to be within $1.95–$2.05 per share, up from the earlier forecast of $1.83–$1.93. Tax rate will be 29–31% while capital spending will be within $25–$30 million.
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