Exhibit 99.1
Altra Holdings Reports 24% Year-over-Year Sales Increase
in Second Quarter 2011
in Second Quarter 2011
Broad-based Demand Strength Continues;
Volume and Operating Model Leverage Drive 22%
Operating Profit Growth, Including Acquisition Costs;
Raises Revenue and EPS Guidance for Full Year 2011
Volume and Operating Model Leverage Drive 22%
Operating Profit Growth, Including Acquisition Costs;
Raises Revenue and EPS Guidance for Full Year 2011
BRAINTREE, Mass., August 8, 2011 — Altra Holdings, Inc. (Nasdaq: AIMC), a leading global
supplier of clutches, brakes, couplings, gearing, belted drives and power transmission components,
today announced unaudited financial results for the second quarter ended July 2, 2011.
Second-quarter Financial Highlights
| • | Net sales increased 24% to $165.4 million compared with $133.0 million in the prior-year quarter. This represents 17.7% organic growth, excluding the Bauer acquisition. | ||
| • | Income from operations increased 22% to $19.1 million from $15.6 million in the second quarter of 2010. Second-quarter 2011 income from operations was reduced by $1.5 million due to acquisition-related costs. Income from operations in the second quarter of 2010 was reduced by $0.6 million in restructuring charges. | ||
| • | Other income was $0.6 million in the second quarter of 2011 compared with other expense of $0.7 million in the second quarter of 2010, due primarily to foreign currency exchange rates. | ||
| • | Net income increased 30% to $8.9 million, or $0.34 per diluted share, in the second quarter of 2011 from $6.8 million, or $0.26 per diluted share, in the second quarter of 2010. Net income was adversely impacted by acquisition related costs and interest expense related to the Company’s Convertible Notes issued in connection with the Bauer acquisition of $2.4 million as well as a higher effective tax rate of 34%. | ||
| • | Cash and cash equivalents were $90.5 million at July 2, 2011 compared with $72.7 million at December 31, 2010. |
Management Comments
“Our solid top-line growth in the second quarter was a combination of the demand we are seeing in
our end markets, and to a lesser extent, one month of sales contribution from the Bauer
acquisition,” said Carl Christenson, President and CEO. “Our early-cycle businesses continue to be
strong, although growth rates are moderating as a result of the difficult year-over-year
comparisons. Late-cycle markets are reporting excellent year-over-year growth. We are well
positioned in our end markets, which provide us with many opportunities for long-term growth. In
addition, the integration of Bauer is proceeding on track and sales and profitability are in line
with our expectations.
“From a bottom-line perspective, while we reported a 22% year-over-year increase in income from
operations, our earnings per share were negatively impacted by acquisition-related costs and
convertible interest expense without benefiting from a full quarterly contribution from Bauer,”
said Christenson. “Excluding those charges, our ability to flow sales to the bottom line was very
similar to the record breaking sequential first quarter of 2011, in terms of EPS performance. This
demonstrates the significant operating leverage in our business model as a result of cost
reductions and productivity initiatives.”
Business Outlook
“We are buoyed by the positive demand signs that we continue to see in our markets, which gives us
greater optimism regarding the balance of the year,” said Christenson. “In addition, we continue
to expect that our Bauer acquisition will be accretive to the bottom line, enabling us to raise our
EPS guidance along with the expected top-line contribution. Our guidance reflects the seasonality
of our business, which is typically slower in the second half of the year. Going forward, we will
continue to execute aggressively on our growth strategy that focuses on capitalizing on
opportunities in new and existing markets, increasing our presence in key underpenetrated
geographic regions, entering new high-growth markets and pursuing strategic acquisitions.”
For full year 2011, the Company now is forecasting sales in the range of $660 to $680 million and
EPS of $1.43 to $1.53. This guidance includes sales and EPS contribution from the Bauer
acquisition but excludes acquisition related costs. The Company now expects its tax rate for the
full year to be in the range of 30.0% to 32.0%. Altra now expects capital expenditures in the
range of $23 to $25 million and depreciation and amortization is expected to be in the range of $25
to $26 million.
The Company will host an investor conference call to discuss its unaudited second quarter financial
results today, August 8, 2011, at 10:00 AM ET. The public is invited to listen to the conference
call by dialing 877-869-3847 domestically or 201-689-8261 for international access and asking to
participate in the ALTRA conference call. A live webcast of the call will be available in the
“Investor Relations” section of www.altramotion.com. Individuals may download charts that
will be used during the call at www.altramotion.com under “Events & Presentations” in
the “Investor Relations” section. The charts will be available after earnings are released. A
replay of the recorded conference call will be available at the conclusion of the call through
midnight on August 15, 2011. To listen to the replay, dial 877-660-6853 domestically or
201-612-7415 for international access, dial account # 364 then replay ID # 376350. A webcast replay
also will be available at www.altramotion.com.
Altra Holdings, Inc.
Consolidated Statements of Income Data:
In Thousands of Dollars, except per share amounts
In Thousands of Dollars, except per share amounts
| Quarter Ended | Year to Date Ended | |||||||||||||||
| July 2, 2011 | July 3, 2010 | July 2, 2011 | July 3, 2010 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
Net sales |
$ | 165,395 | $ | 132,988 | $ | 325,242 | $ | 260,694 | ||||||||
Cost of sales |
116,985 | 92,861 | 228,997 | 183,164 | ||||||||||||
Gross profit |
$ | 48,410 | $ | 40,127 | $ | 96,245 | $ | 77,530 | ||||||||
Gross profit as a percent of net sales |
29.3 | % | 30.2 | % | 29.6 | % | 29.7 | % | ||||||||
Selling, general & administrative expenses |
26,912 | 22,215 | 52,428 | 43,187 | ||||||||||||
Research and development expenses |
2,426 | 1,631 | 4,743 | 3,410 | ||||||||||||
Restructuring expense |
— | 642 | — | 1,688 | ||||||||||||
Income from operations |
$ | 19,072 | $ | 15,639 | $ | 39,074 | $ | 29,245 | ||||||||
Income from operations as a percent of net sales |
11.5 | % | 11.8 | % | 12.0 | % | 11.2 | % | ||||||||
Interest expense, net |
6,153 | 4,956 | 11,316 | 9,896 | ||||||||||||
Other non-operating expense, net |
(599 | ) | 727 | (885 | ) | 1,022 | ||||||||||
Income from continuing operations before income taxes |
$ | 13,518 | $ | 9,956 | $ | 28,643 | $ | 18,327 | ||||||||
Provision for income taxes |
4,600 | 3,117 | 9,003 | 5,749 | ||||||||||||
Income tax rate |
34.0 | % | 31.3 | % | 31.4 | % | 31.4 | % | ||||||||
Net income |
$ | 8,918 | $ | 6,839 | $ | 19,640 | $ | 12,578 | ||||||||
Weighted Average common shares outstanding |
||||||||||||||||
Basic |
26,491 | 26,362 | 26,491 | 26,349 | ||||||||||||
Diluted |
26,613 | 26,487 | 26,657 | 26,465 | ||||||||||||
Net income per share |
||||||||||||||||
Basic |
0.34 | 0.26 | 0.74 | 0.48 | ||||||||||||
Diluted |
$ | 0.34 | $ | 0.26 | $ | 0.74 | $ | 0.48 | ||||||||
Consolidated Balance Sheets
In Thousands of Dollars
| July 2, 2011 | December 31, 2010 | |||||||
| (unaudited) | ||||||||
Assets: |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
90,487 | 72,723 | ||||||
Trade Receivables, net |
108,373 | 67,403 | ||||||
Inventories |
119,630 | 88,217 | ||||||
Deferred income taxes |
4,413 | 4,414 | ||||||
Income tax receivable |
3,834 | 4,126 | ||||||
Assets held for sale |
— | 1,484 | ||||||
Prepaid expenses and other current assets |
6,712 | 4,168 | ||||||
Total current assets |
333,449 | 242,535 | ||||||
Property, plant and equipment, net |
125,572 | 105,298 | ||||||
Intangible assets, net |
82,769 | 69,250 | ||||||
Goodwill |
85,072 | 76,897 | ||||||
Deferred income taxes |
78 | 82 | ||||||
Other non-current assets, net |
16,558 | 14,040 | ||||||
Total assets |
$ | 643,498 | $ | 508,102 | ||||
Liabilities and stockholders’ equity |
||||||||
Current liabilities |
||||||||
Accounts payable |
49,829 | 40,812 | ||||||
Accrued payroll |
19,477 | 18,486 | ||||||
Accruals and other liabilities |
38,514 | 24,142 | ||||||
Deferred income taxes |
54 | 59 | ||||||
Current portion of long-term debt |
958 | 3,393 | ||||||
Total current liabilities |
108,832 | 86,892 | ||||||
Long-term debt, less current portion and net of unaccreted discount |
274,476 | 213,109 | ||||||
Deferred income taxes |
29,987 | 20,558 | ||||||
Pension liabilities |
12,015 | 10,808 | ||||||
Long-term taxes payable |
11,283 | 10,892 | ||||||
Other long-term liabilities |
1,005 | 1,091 | ||||||
Total stockholders’ equity |
205,900 | 164,752 | ||||||
Total liabilities and stockholders’ equity |
$ | 643,498 | $ | 508,102 | ||||
| Year to Date Ended | ||||||||
| July 2, 2011 | July 3, 2010 | |||||||
| (Unaudited) | ||||||||
Cash flows from operating activities |
||||||||
Net income |
$ | 19,640 | $ | 12,578 | ||||
Adjustments to reconcile net income to net cash flows: |
||||||||
Depreciation |
8,420 | 8,192 | ||||||
Amortization of intangible assets |
2,863 | 2,350 | ||||||
Amortization and write-offs of deferred financing costs |
784 | 416 | ||||||
Loss on foreign currency, net |
(158 | ) | 361 | |||||
Accretion of debt discount, net |
1,045 | 148 | ||||||
Fixed asset impairment/disposal |
— | 207 | ||||||
Stock-based compensation |
1,374 | 1,120 | ||||||
Changes in assets and liabilities: |
||||||||
Trade receivables |
(22,275 | ) | (18,570 | ) | ||||
Inventories |
(8,318 | ) | (4,023 | ) | ||||
Accounts payable and accrued liabilities |
6,301 | 19,099 | ||||||
Other current assets and liabilities |
(625 | ) | (1,672 | ) | ||||
Other operating assets and liabilities |
(1,896 | ) | (173 | ) | ||||
Net cash provided by (used in) operating activities |
7,155 | 20,033 | ||||||
Cash flows from investing activities |
||||||||
Purchase of property, plant and equipment |
(8,898 | ) | (7,762 | ) | ||||
Additional purchase price paid for acquisition |
— | (1,177 | ) | |||||
Proceeds from sale of Chattanooga Facility |
1,484 | — | ||||||
Acquisition of Bauer, net of $41 cash received |
(62,291 | ) | — | |||||
Net cash used in investing activities |
(69,705 | ) | (8,939 | ) | ||||
Cash flows from financing activities |
||||||||
Payment of issuance costs for Convertible Notes |
(3,414 | ) | — | |||||
Payment of issuance costs for 8
1/8 Senior Secured Notes |
— | (122 | ) | |||||
Proceeds from issuance of Convertible Notes |
85,000 | — | ||||||
Shares surrendered for tax withholdings |
(65 | ) | (288 | ) | ||||
Redemption of bonds related to Chattanooga |
(2,290 | ) | — | |||||
Payment on mortgages |
(197 | ) | (418 | ) | ||||
Net payments on capital leases |
(400 | ) | (381 | ) | ||||
Net cash provided by (used in) financing activities |
78,634 | (1,209 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents |
1,680 | (3,179 | ) | |||||
Net change in cash and cash equivalents |
17,764 | 6,706 | ||||||
Cash and cash equivalents at beginning of year |
72,723 | 51,497 | ||||||
Cash and cash equivalents at end of period |
$ | 90,487 | $ | 58,203 | ||||
About Altra Holdings
Altra Holdings, Inc., through its wholly-owned subsidiary Altra Industrial Motion, Inc., is a
leading multinational designer, producer and marketer of a wide range of mechanical power
transmission products. The company brings together strong brands covering over 50 product lines
with production facilities in nine countries and sales coverage in over 70 countries. Our leading
brands include Boston Gear, Warner Electric, TB Wood’s, Formsprag Clutch, Ameridrives Couplings,
Industrial Clutch, Kilian Manufacturing, Marland Clutch, Nuttall Gear, Stieber Clutch, Wichita
Clutch, Twiflex Limited, Bibby Transmissions, Matrix International, Inertia Dynamics, Huco
Dynatork, Warner Linear, and Bauer Gear Motor.
All statements, other than statements of historical fact included in this release are
forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act
of 1995. These statements include, but are not limited to, any statement that may predict,
forecast, indicate or imply future results, performance, achievements or events. Forward-looking
statements can generally be identified by phrases such as “believes,” “expects,” “potential,”
“continues,” “may,” “should,” “seeks,” “predicts,” “anticipates,” “intends,” “projects,”
“estimates,” “plans,” “could,” “designed”, “should be,” and other similar expressions that denote
expectations of future or conditional events rather than statements of fact. Forward-looking
statements also may relate to strategies, plans and objectives for, and potential results of,
future operations, financial results, financial condition, business prospects, growth strategy and
liquidity, and are based upon financial data, market assumptions and management’s current business
plans and beliefs or current estimates of future results or trends available only as of the time
the statements are made, which may become out of date or incomplete. Forward-looking statements are
inherently uncertain, and investors must recognize that events could differ significantly from our
expectations. These statements include, but may not be limited to, those comments regarding the
Company’s plan to execute aggressively its growth strategy during the remainder of 2011, its
strategy to capitalize on growth opportunities in new and existing markets, increase its presence
in key underpenetrated geographic regions, enter new high-growth markets and pursue strategic
acquisitions, the Company’s positioning in its end markets and its opportunities for long-term
growth, the Company’s expectations regarding the integration of Bauer and the Company’s
expectations for Bauer’s sales and profitability, the positive demand signs in Altra’s end markets,
the Company’s optimism regarding the second half of 2011, the seasonality of the business, and the
Company’s guidance for 2011 for sales, EPS, capital expenditures, depreciation and amortization,
and tax rate.
In addition to the risks and uncertainties noted in this release, there are certain factors that
could cause actual results to differ materially from those anticipated by some of the statements
made. These include: (1) competitive pressures, (2) changes in economic conditions in the United
States and abroad and the cyclical nature of our markets, (3) loss of distributors, (4) the ability
to develop new products and respond to customer needs, (5) risks associated with international
operations, including currency risks, (6) accuracy of estimated forecasts of OEM customers and the
impact of the current global economic environment on our customers, (7) risks associated with a
disruption to our supply chain, (8) fluctuations in the costs of raw materials used in our
products, (9) product liability claims, (10) work stoppages and other labor issues, (11) changes in
employment, environmental, tax and other laws and changes in the enforcement of laws, (12) loss of
key management and other personnel, (13) changes in pension and retirement liabilities, (14) risks
associated with compliance with environmental laws, (15) the ability to
successfully execute, manage and integrate key acquisitions and mergers, (16) failure to obtain or
protect intellectual property rights, (17) risks associated with impairment of goodwill or
intangibles assets,
(18) failure of operating equipment or information technology infrastructure, (19) risks associated
with our debt leverage and operating covenants under our debt instruments, (20) risks associated
with restrictions contained in our Senior Secured Notes and Convertible Notes, (21) risks
associated with compliance with tax laws, (22) risks associated with the global recession and
volatility and disruption in the global financial markets, (23) risks associated with
implementation of our new ERP system, (24) risks associated with the Bauer acquisition and
integration, (25) risks associated with the Company’s planned investment in a new manufacturing
facility in China, and (26) other risks, uncertainties and other factors described in the Company’s
quarterly reports on Form 10-Q and annual reports on Form 10-K and in the Company’s other filings
with the U.S. Securities and Exchange Commission (SEC) or in materials incorporated therein by
reference. Except as required by applicable law, Altra Holdings, Inc. does not intend to, update or
alter its forward looking statements, whether as a result of new information, future events or
otherwise. AIMC-E
Contact:
Altra Holdings, Inc.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com
Altra Holdings, Inc.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com
