SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
July 26, 2018
Date of Report (Date of earliest event reported)
ALTRA INDUSTRIAL MOTION CORP.
(Exact name of registrant as specified in its charter)
Delaware |
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001-33209 |
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61-1478870 |
(State or other jurisdiction of incorporation) |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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300 Granite Street, Suite 201 Braintree, Massachusetts |
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02184 |
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(Address of principal executive offices) |
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(Zip Code) |
(781) 917-0600
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☒ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
On July 26, 2018, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the second quarter ended June 30, 2018. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On July 26, 2018, the Company will hold a conference call with investors to discuss unaudited results for the second quarter ended June 30, 2018. The chart presentation to be used during the call is attached hereto as Exhibit 99.2 to this report and is incorporated by reference herein.
Item 8.01 Other Events
On July 26, 2018, Altra Industrial Motion Corp. (“the Company”) announced certain unaudited financial results for the second quarter ended June 30, 2018. A copy of the announcement is attached hereto as Exhibit 99.1, which is incorporated by reference herein. On July 26, 2018, the Company will hold a conference call with investors to discuss unaudited results for the second quarter ended June 30, 2018. The chart presentation to be used during the call is attached hereto as Exhibit 99.2 to this report and is incorporated by reference herein.
Item 9.01 |
Financial Statements and Exhibits |
(d) Exhibits
Exhibit No. |
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Description |
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99.1 |
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Press release of Altra Industrial Motion Corp., dated July 26, 2018. |
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99.2 |
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Charts to be used during the investor conference call on July 26, 2018. |
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ALTRA INDUSTRIAL MOTION CORP. |
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/s/ Carl R. Christenson |
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Name: |
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Carl R. Christenson |
Title: |
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Chairman and Chief Executive Officer |
Date: July 26, 2018
Exhibit 99.1
Altra Reports Second-Quarter 2018 Results
Achieves Record EPS; Raises Guidance for Full Year 2018 as Growth Momentum Continues
BRAINTREE, Mass., July 26, 2018 - Altra Industrial Motion Corp. (Nasdaq: AIMC), a global manufacturer and marketer of electromechanical power transmission and motion control products, today announced unaudited financial results for the second quarter ended June 30, 2018.
Second-Quarter Financial Highlights
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• |
Net sales were $237.3 million, up 6.2% from $223.4 million in the second quarter of 2017. Excluding the positive impact of foreign currency translation, net sales were up 2.9% from the same quarter of 2017. |
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• |
Net income increased 23.4% to $19.0 million, or $0.65 per diluted share, from $15.4 million, or $0.53 per diluted share, in the second quarter of 2017. |
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• |
Non-GAAP net income grew 25.3% to $20.8 million, or $0.71 per diluted share, from $16.6 million, or $0.57 per diluted share, a year ago.* |
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• |
Free cash flow increased 23.5% to $14.2 million year to date compared to the same period last year.* |
Management Comments
“Our strong momentum continued in the second quarter as sales grew 6.2%, our sixth consecutive quarterly year-over-year increase,” said Carl Christenson, Altra’s Chairman and CEO. “We are capitalizing on the ongoing strength of the industrial economy, leveraging robust demand across most of our end markets, and we remain on-track in the execution of our growth strategy. Through our ongoing focus on bottom-line improvement, we achieved 23.4% and 25.3% increases in GAAP and non-GAAP net income, respectively, in the second quarter.*
“Integration planning is on target for the combined Fortive Automation & Specialty business and Altra businesses to hit the ground running on day one,” continued Christenson. “Our plan remains to close on the acquisition by the end of the year and our entire team is working very hard to close as early as possible. We look forward to creating a premium global industrial company that expands our portfolio across the technology spectrum and increases our exposure to end markets with attractive secular trends.
“We have a strong new business pipeline with excellent opportunities for organic growth, and increasing confidence in the staying power of the current industrial economy,” continued Christenson. “As a result of this optimism and our first-half performance, we are raising our guidance for full year 2018.”
Business Outlook
Altra is increasing its guidance for full year 2018. The Company currently expects full-year 2018 sales in the range of $920 to $935 million, up from its previous guidance in the range of $910 to $930 million. Altra currently expects GAAP diluted EPS in the range of $2.06 to $2.11, and non-GAAP diluted EPS in the range of $2.45 to $2.55. This is up from its previous guidance of GAAP diluted EPS in the range of $1.99 to $2.08, and non-GAAP diluted EPS guidance in the range of $2.36 to $2.49. The Company expects its tax rate for the full year to be approximately 23% to 25% before discrete items, capital expenditures in the range of $28 to $30 million, and depreciation and amortization in the range of $36 to $38 million.*
Reconciliations of Non-GAAP Disclosures
*Reconciliation of Non-GAAP Net Income:
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Quarter Ended |
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Year to Date Ended |
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June 30, 2018 |
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June 30, 2017 |
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June 30, 2018 |
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June 30, 2017 |
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Net Income |
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$ |
19,007 |
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$ |
15,384 |
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$ |
28,008 |
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$ |
25,710 |
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Restructuring and consolidation costs |
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$ |
566 |
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$ |
1,198 |
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$ |
1,509 |
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$ |
3,096 |
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Loss on extinguishment of convertible debt |
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- |
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- |
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- |
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1,797 |
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Loss on settlement of pension plan |
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- |
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- |
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5,086 |
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- |
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Supplier warranty settlement |
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(1,980 |
) |
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- |
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(1,980 |
) |
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- |
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Amortization of inventory fair value adjustment |
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- |
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- |
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- |
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2,347 |
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Acquisition related expenses |
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1,833 |
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568 |
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7,241 |
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1,566 |
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Tax impact of above adjustments |
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1,348 |
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(529 |
) |
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213 |
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(2,620 |
) |
Non-GAAP net income* |
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$ |
20,774 |
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$ |
16,621 |
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$ |
40,077 |
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$ |
31,896 |
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Non-GAAP diluted earnings per share* |
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$ |
0.71 |
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$ |
0.57 |
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$ |
1.37 |
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$ |
1.10 |
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*Reconciliation of Free Cash Flow:
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Quarter Ended |
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June 30, 2018 |
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June 30, 2017 |
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Net cash flows from operating activities |
$ |
29,109 |
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$ |
25,956 |
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Purchase of property, plant and equipment |
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(14,936 |
) |
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(14,416 |
) |
Free cash flow* |
$ |
14,173 |
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$ |
11,540 |
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In Thousands of Dollars, except per share amounts |
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*Reconciliation of Non-GAAP Operating Margin:
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Quarter Ended |
Year to Date Ended |
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June 30, 2018 |
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June 30, 2017 |
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June 30, 2018 |
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June 30, 2017 |
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Income from operations |
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$ |
28,049 |
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$ |
23,149 |
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$ |
47,729 |
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$ |
40,811 |
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Restructuring and consolidation costs |
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566 |
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1,198 |
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1,509 |
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3,096 |
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Amortization of inventory fair value adjustment |
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- |
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- |
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- |
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2,347 |
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Supplier warranty settlement |
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(1,980 |
) |
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- |
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(1,980 |
) |
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- |
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Acquisition related expenses |
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1,833 |
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568 |
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7,241 |
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1,566 |
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Non-GAAP income from operations * |
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$ |
28,468 |
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$ |
24,915 |
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$ |
54,499 |
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$ |
47,820 |
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Non-GAAP Income from operations as a percent of net sales* |
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12.0 |
% |
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11.2 |
% |
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11.4 |
% |
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10.9 |
% |
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Fiscal Year 2018 |
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Fiscal Year 2018 Diluted earnings per share |
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Net Income |
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$60.0 - $61.4 |
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$2.06 - $2.11 |
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Adjustments (1) |
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Restructuring and consolidation costs |
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2.0 - 4.0 |
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Acquisition related expenses (2) |
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7.2 |
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Loss on settlement of pension plan |
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5.1 |
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Supplier warranty settlement |
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(2.0) |
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Tax impact of above adjustments (3) |
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(1.0) - (1.5) |
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Non-GAAP Net Income |
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$71.3 - $74.2 |
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$2.45 - $2.55 |
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(1) Adjustments are pre-tax, with net tax impact listed separately. |
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(2) Due to the uncertainty as to when future acquisition-related expenditures will be incurred, Altra has only included in its reconciliation those costs incurred year-to-date. Altra expects to incur between $30-$50 million in acquisition-related expenditures in conjunction with the planned Fortive A&S business acquisition. |
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(3) Tax impact is calculated by multiplying the estimated effective tax rate for the period of 23% - 25% before discrete items by the above items with the exception of acquisition-related expenses and the supplier warranty settlement. Due to the uncertainty of deductibility and the non-recurring nature of the acquisition-related expenses, no tax benefit is assumed and the negative rate impact has been adjusted from the non-GAAP net income calculation. The supplier warranty settlement income is not taxable in the local jurisdiction, therefore no tax impact has been assumed. |
Conference Call
The Company will conduct an investor conference call to discuss its unaudited second-quarter 2018 financial results today, July 26, 2018 at 10:00 a.m. ET. The public is invited to listen to the conference call by dialing (877) 407-8293 domestically or (201) 689-8349 for international access. 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 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 after the conclusion of the call on July 26 through midnight on August 9, 2018. To listen to the replay, dial (877) 660-6853 domestically or (201) 612-7415 for international access (conference ID # 13681715). A webcast replay also will be available.
Altra Industrial Motion Corp. |
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Consolidated Statements of Income Data: |
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Quarter Ended |
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Year to Date Ended |
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In Thousands of Dollars, except per share amounts |
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June 30, 2018 |
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June 30, 2017 |
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June 30, 2018 |
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June 30, 2017 |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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(Unaudited) |
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Net sales |
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$ |
237,323 |
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|
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$ |
223,357 |
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|
|
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$ |
477,708 |
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$ |
438,792 |
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|
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Cost of sales |
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|
159,068 |
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|
|
|
|
151,231 |
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|
|
|
|
325,227 |
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|
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300,499 |
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Gross profit |
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$ |
78,255 |
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|
|
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$ |
72,126 |
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|
|
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$ |
152,481 |
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|
|
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$ |
138,293 |
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Gross profit as a percent of net sales |
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33.0 |
% |
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32.3 |
% |
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31.9 |
% |
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31.5 |
% |
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Selling, general & administrative expenses |
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|
43,382 |
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|
|
|
|
41,619 |
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|
|
|
|
90,512 |
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|
|
|
|
82,003 |
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Research and development expenses |
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|
6,258 |
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|
|
|
|
6,160 |
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|
|
|
|
12,731 |
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|
|
|
|
12,383 |
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|
|
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Restructuring and consolidation costs |
|
|
566 |
|
|
|
|
|
1,198 |
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|
|
|
|
1,509 |
|
|
|
|
|
3,096 |
|
|
|
|
Income from operations |
|
$ |
28,049 |
|
|
|
|
$ |
23,149 |
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|
|
|
$ |
47,729 |
|
|
|
|
$ |
40,811 |
|
|
|
|
Income from operations as a percent of net sales |
|
|
11.8 |
% |
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|
|
|
10.4 |
% |
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|
|
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10.0 |
% |
|
|
|
|
9.3 |
% |
|
|
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Loss on settlement of pension plan |
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|
- |
|
|
|
|
|
- |
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|
|
|
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5,086 |
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|
|
|
|
- |
|
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Interest expense, net |
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|
2,065 |
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|
|
|
|
2,031 |
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|
|
|
|
3,899 |
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|
|
|
|
3,736 |
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Other non-operating income, net |
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|
(282 |
) |
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|
|
|
(136 |
) |
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|
|
|
(428 |
) |
|
|
|
|
(666 |
) |
|
|
|
Loss on extinguishment of convertible debt |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,797 |
|
|
|
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Income before income taxes |
|
$ |
26,266 |
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|
|
|
$ |
21,254 |
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|
|
|
$ |
39,172 |
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|
|
|
$ |
35,944 |
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|
|
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Provision for income taxes |
|
|
7,259 |
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|
|
|
|
5,870 |
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|
|
|
|
11,164 |
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|
|
|
|
10,234 |
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|
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Income tax rate |
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|
27.6 |
% |
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|
|
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27.6 |
% |
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|
|
|
28.5 |
% |
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|
|
|
28.5 |
% |
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|
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Net income |
|
|
19,007 |
|
|
|
|
|
15,384 |
|
|
|
|
|
28,008 |
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|
|
|
|
25,710 |
|
|
|
|
|
|
|
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|
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Weighted Average common shares outstanding |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic |
|
|
28,979 |
|
|
|
|
|
28,978 |
|
|
|
|
|
29,085 |
|
|
|
|
|
28,873 |
|
|
|
|
Diluted |
|
|
29,089 |
|
|
|
|
|
29,114 |
|
|
|
|
|
29,245 |
|
|
|
|
|
29,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income per share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Basic |
|
$ |
0.66 |
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|
|
|
$ |
0.53 |
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|
|
$ |
0.97 |
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|
|
|
$ |
0.89 |
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|
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|
Diluted |
|
$ |
0.65 |
|
|
|
|
$ |
0.53 |
|
|
|
|
$ |
0.96 |
|
|
|
|
$ |
0.89 |
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
|
|
|
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|
Reconciliation of Non-GAAP Income From Operations: |
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|
|
|
|
|
|
|
|
|
Income from operations |
|
$ |
28,049 |
|
|
|
|
$ |
23,149 |
|
|
|
|
$ |
47,729 |
|
|
|
|
$ |
40,811 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and consolidation costs |
|
|
566 |
|
|
|
|
|
1,198 |
|
|
|
|
|
1,509 |
|
|
|
|
|
3,096 |
|
|
|
|
Amortization of inventory fair value adjustment |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
2,347 |
|
|
|
|
Supplier warranty settlement |
|
|
(1,980 |
) |
|
|
|
|
- |
|
|
|
|
|
(1,980 |
) |
|
|
|
|
- |
|
|
|
|
Acquisition related expenses |
|
|
1,833 |
|
|
|
|
|
568 |
|
|
|
|
|
7,241 |
|
|
|
|
|
1,566 |
|
|
|
|
Non-GAAP income from operations * |
|
$ |
28,468 |
|
|
|
|
$ |
24,915 |
|
|
|
|
$ |
54,499 |
|
|
|
|
$ |
47,820 |
|
|
|
|
Non-GAAP Income from operations as a percent of net sales* |
|
|
12.0 |
% |
|
|
|
|
11.2 |
% |
|
|
|
|
11.4 |
% |
|
|
|
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Net Income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
19,007 |
|
|
|
|
$ |
15,384 |
|
|
|
|
$ |
28,008 |
|
|
|
|
$ |
25,710 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and consolidation costs |
|
|
566 |
|
|
|
|
|
1,198 |
|
|
|
|
|
1,509 |
|
|
|
|
|
3,096 |
|
|
|
|
Loss on extinguishment of convertible debt |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,797 |
|
|
|
|
Supplier warranty settlement |
|
|
(1,980 |
) |
|
|
|
|
- |
|
|
|
|
|
(1,980 |
) |
|
|
|
|
- |
|
|
|
|
Loss on settlement of pension plan |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
5,086 |
|
|
|
|
|
- |
|
|
|
|
Amortization of inventory fair value adjustment |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
2,347 |
|
|
|
|
Acquisition related expenses |
|
|
1,833 |
|
|
|
|
|
568 |
|
|
|
|
|
7,241 |
|
|
|
|
|
1,566 |
|
|
|
|
Tax impact of above adjustments |
|
|
1,348 |
|
|
|
|
|
(529 |
) |
|
|
|
|
213 |
|
|
|
|
|
(2,620 |
) |
|
|
|
Non-GAAP net income * |
|
|
20,774 |
|
|
|
|
|
16,621 |
|
|
|
|
|
40,077 |
|
|
|
|
|
31,896 |
|
|
|
|
Non-GAAP diluted earnings per share * |
|
$ |
0.71 |
|
|
(1 |
) |
$ |
0.57 |
|
|
(2 |
) |
$ |
1.37 |
|
|
(3 |
) |
$ |
1.10 |
|
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) - Tax impact is calculated by multiplying the estimated effective tax rate for the period of 24.2% by restructuring and consolidation costs. Acquisition related expenses in the quarter are not tax deductible, therefore the tax impact has been eliminated. The supplier warranty settlement income is not taxable in the local jurisdiction; therefore, no tax impact has been assumed. |
|
|
|
|
|||||||||||||||||||||
(2) - Tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.9% by the above items. |
|
|
|
|
|||||||||||||||||||||
(3) - Tax impact is calculated by multiplying the estimated effective tax rate for the period of 24.2% by restructuring and consolidation costs and the loss on settlement of pension plan. Acquisition related expenses for the year to date period are not tax deductible, therefore the tax impact has been eliminated. The supplier warranty settlement income is not taxable in the local jurisdiction; therefore, no tax impact has been assumed. |
|
|
|
|
|||||||||||||||||||||
(4) - Tax impact is calculated by multiplying the estimated effective tax rate for the period of 29.8% by the above items. |
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
In Thousands of Dollars |
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
|
|
(unaudited) |
|
|
|
|
|
|
Assets: |
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
38,114 |
|
|
$ |
51,994 |
|
Trade receivables, net |
|
|
146,419 |
|
|
|
135,499 |
|
Inventories |
|
|
149,592 |
|
|
|
145,611 |
|
Income tax receivable |
|
|
1,832 |
|
|
|
6,634 |
|
Prepaid expenses and other current assets |
|
|
21,012 |
|
|
|
17,344 |
|
Assets held for sale |
|
|
701 |
|
|
|
1,081 |
|
Total current assets |
|
|
357,670 |
|
|
|
358,163 |
|
Property, plant and equipment, net |
|
|
189,328 |
|
|
|
191,918 |
|
Intangible assets, net |
|
|
151,639 |
|
|
|
159,613 |
|
Goodwill |
|
|
203,292 |
|
|
|
206,040 |
|
Deferred income taxes |
|
|
1,592 |
|
|
|
2,608 |
|
Other non-current assets, net |
|
|
3,031 |
|
|
|
2,315 |
|
Total assets |
|
$ |
906,552 |
|
|
$ |
920,657 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
62,935 |
|
|
$ |
68,014 |
|
Accrued payroll |
|
|
27,066 |
|
|
|
32,091 |
|
Accruals and other current liabilities |
|
|
38,475 |
|
|
|
32,921 |
|
Income tax payable |
|
|
9,032 |
|
|
|
9,082 |
|
Current portion of long-term debt |
|
|
1,364 |
|
|
|
384 |
|
Total current liabilities |
|
|
138,872 |
|
|
|
142,492 |
|
Long-term debt - less current portion |
|
|
260,024 |
|
|
|
275,587 |
|
Deferred income taxes |
|
|
50,214 |
|
|
|
52,250 |
|
Pension liabilities |
|
|
24,390 |
|
|
|
25,038 |
|
Long term taxes payable |
|
|
5,418 |
|
|
|
6,322 |
|
Other long-term liabilities |
|
|
14,742 |
|
|
|
22,263 |
|
Total stockholders' equity |
|
|
412,892 |
|
|
|
396,705 |
|
Total liabilities, and stockholders' equity |
|
$ |
906,552 |
|
|
$ |
920,657 |
|
|
|
|
|
|
|
|
|
|
Reconciliation to operating working capital: |
|
|
|
|
|
|
|
|
Trade receivables, net |
|
|
146,419 |
|
|
|
135,499 |
|
Inventories |
|
|
149,592 |
|
|
|
145,611 |
|
Accounts payable |
|
|
(62,935 |
) |
|
|
(68,014 |
) |
Operating working capital * |
|
$ |
233,076 |
|
|
$ |
213,096 |
|
|
|
Year to Date Ended |
|
|||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||
|
|
(Unaudited) |
|
|
(Unaudited) |
|
||
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net income |
|
$ |
28,008 |
|
|
$ |
25,710 |
|
Adjustments to reconcile net income to net cash flows: |
|
|
|
|
|
|
|
|
Depreciation |
|
|
13,779 |
|
|
|
12,930 |
|
Amortization of intangible assets |
|
|
4,900 |
|
|
|
4,685 |
|
Amortization of deferred financing costs |
|
|
299 |
|
|
|
299 |
|
Loss on foreign currency, net |
|
|
4 |
|
|
|
132 |
|
Loss on settlement of pension plan |
|
|
5,086 |
|
|
|
- |
|
Loss/(Gain) on disposal / impairment of fixed assets |
|
|
298 |
|
|
|
(74 |
) |
Loss on extinguishment of debt |
|
|
- |
|
|
|
1,797 |
|
Stock based compensation |
|
|
2,680 |
|
|
|
3,153 |
|
Amortization of inventory fair value adjustment |
|
|
- |
|
|
|
2,347 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Trade receivables |
|
|
(12,971 |
) |
|
|
(12,812 |
) |
Inventories |
|
|
(5,478 |
) |
|
|
(1,473 |
) |
Accounts payable and accrued liabilities |
|
|
2,024 |
|
|
|
(9,212 |
) |
Other current assets and liabilities |
|
|
(3,956 |
) |
|
|
(1,146 |
) |
Other operating assets and liabilities |
|
|
(5,564 |
) |
|
|
(380 |
) |
Net cash provided by operating activities |
|
|
29,109 |
|
|
|
25,956 |
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(14,936 |
) |
|
|
(14,416 |
) |
Working capital settlement from prior year acquisitions |
|
|
- |
|
|
|
2,883 |
|
Acquisition of Aluminum Die Casting, S.r.L. |
|
|
(2,663 |
) |
|
|
- |
|
Net cash used in investing activities |
|
|
(17,599 |
) |
|
|
(11,533 |
) |
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Payments on Revolving Credit Facility |
|
|
(24,449 |
) |
|
|
(24,054 |
) |
Dividend payments |
|
|
(9,972 |
) |
|
|
(8,300 |
) |
Borrowing under Revolving Credit Facility |
|
|
11,000 |
|
|
|
5,000 |
|
Payments of equipment, working capital notes, mortgages and other debt |
|
|
(568 |
) |
|
|
(505 |
) |
Cash paid to redeem Convertible Notes |
|
|
— |
|
|
|
(954 |
) |
Shares surrendered for tax withholding |
|
|
(1,490 |
) |
|
|
(386 |
) |
Net cash used in financing activities |
|
|
(25,479 |
) |
|
|
(29,199 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
89 |
|
|
|
4,639 |
|
Net change in cash and cash equivalents |
|
|
(13,880 |
) |
|
|
(10,137 |
) |
Cash and cash equivalents at beginning of year |
|
|
51,994 |
|
|
|
69,118 |
|
Cash and cash equivalents at end of period |
|
$ |
38,114 |
|
|
$ |
58,981 |
|
Reconciliation to free cash flow: |
|
|
|
|
|
|
|
|
Net cash flows from operating activities |
|
|
29,109 |
|
|
|
25,956 |
|
Purchase of property, plant and equipment |
|
|
(14,936 |
) |
|
|
(14,416 |
) |
Free cash flow* |
|
$ |
14,173 |
|
|
$ |
11,540 |
|
Selected Segment Data |
|
Quarter Ended June 30 |
|
|
Year to Date Ended June 30 |
|
||||||||||
In Thousands of Dollars, except per share amount |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
||||
Net Sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Couplings, Clutches & Brakes |
|
$ |
122,734 |
|
|
$ |
110,969 |
|
|
$ |
242,907 |
|
|
$ |
217,201 |
|
Electromagnetic Clutches & Brakes |
|
|
65,136 |
|
|
|
65,281 |
|
|
|
134,243 |
|
|
|
129,159 |
|
Gearing |
|
|
51,567 |
|
|
|
49,149 |
|
|
|
105,452 |
|
|
|
96,177 |
|
Eliminations |
|
|
(2,114 |
) |
|
|
(2,042 |
) |
|
|
(4,894 |
) |
|
|
(3,745 |
) |
Total |
|
$ |
237,323 |
|
|
$ |
223,357 |
|
|
$ |
477,708 |
|
|
$ |
438,792 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Couplings, Clutches & Brakes |
|
$ |
18,740 |
|
|
$ |
12,007 |
|
|
$ |
32,160 |
|
|
$ |
20,352 |
|
Electromagnetic Clutches & Brakes |
|
|
8,076 |
|
|
|
8,163 |
|
|
|
16,744 |
|
|
|
15,756 |
|
Gearing |
|
|
6,399 |
|
|
|
6,590 |
|
|
|
12,515 |
|
|
|
12,115 |
|
Corporate |
|
|
(4,600 |
) |
|
|
(2,413 |
) |
|
|
(12,181 |
) |
|
|
(4,316 |
) |
Restructuring and consolidation costs |
|
|
(566 |
) |
|
|
(1,198 |
) |
|
|
(1,509 |
) |
|
|
(3,096 |
) |
Total |
|
$ |
28,049 |
|
|
$ |
23,149 |
|
|
$ |
47,729 |
|
|
$ |
40,811 |
|
About Altra Industrial Motion Corp.
Altra Industrial Motion Corp., through its subsidiaries, is a leading global designer, producer and marketer of a wide range of electromechanical power transmission and motion control products. The Company brings together strong brands covering over 40 product lines with production facilities in twelve countries. Altra's leading brands include Ameridrives Couplings, Bauer Gear Motor, Bibby Turboflex, Boston Gear, Delroyd Worm Gear, Formsprag Clutch, Guardian Couplings, Huco, Industrial Clutch, Inertia Dynamics, Kilian Manufacturing, Lamiflex Couplings, Marland Clutch, Matrix, Nuttall Gear, Stieber Clutch, Stromag, Svendborg Brakes, TB Wood's, Twiflex, Warner Electric, Warner Linear, and Wichita Clutch.
The Altra Industrial Motion Corp. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4038.
* Discussion of Non-GAAP Financial Measures
As used in this release and the accompanying slides posted on the Company's website, non-GAAP diluted earnings per share, non-GAAP income from operations and non-GAAP net income are each calculated using either net income or income from operations that excludes acquisition related costs, restructuring costs, and other income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP gross profit is calculated using gross profit that excludes income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP diluted earnings per share is calculated by dividing non-GAAP net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from net cash flows from operating activities. Non-GAAP operating working capital is calculated by deducting accounts payable from net trade receivables plus inventories.
Altra believes that the presentation of non-GAAP net income, non-GAAP income from operations, non-GAAP gross profit, non-GAAP diluted earnings per share, non-GAAP free cash flow and non-GAAP operating working capital provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations.
Additional Information
This communication does not constitute an offer to buy, or a solicitation of an offer to sell, any securities of Fortive Corporation (“Fortive”), Stevens Holding Company, Inc. (“Newco”) or Altra Industrial Motion Corp. (“Altra”). In connection with the proposed transaction, Newco filed a registration statement on Form S-4/S-1 containing a prospectus and Altra filed a registration statement on Form S-4 containing a prospectus (together, the “registration statements”) and a preliminary proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the “SEC”), in each case on May 8, 2018. Each of Altra and Newco have filed, and expect to file, amendments to these filings before they become effective. Investors and security holders are urged to read the registration statements and Altra’s preliminary proxy statement and any further amendments to these filings when they become available as well as any other relevant documents to be filed with the SEC when they become available because such documents contain or will contain important information about Altra, Fortive, Newco and the proposed transaction. Altra’s preliminary proxy statement, the registration statements and any further amendments to these filings as well as any other relevant documents relating to the proposed transaction can be obtained free of charge from the SEC’s website at www.sec.gov. Such documents can also be obtained free of charge from Fortive upon written request to Fortive Corporation, Investor Relations, 6920 Seaway Blvd., Everett, WA 98203, or by calling (425) 446-5000 or upon written request to Altra Industrial Motion Corp., Investor Relations, 300 Granite St., Suite 201, Braintree, MA 02184, or by calling (781) 917-0527.
Forward-Looking Statements
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, the statements under “Business Outlook,” our expectations regarding our tax rate, our expectations regarding our acquisition of the Fortive A&S businesses, and the Company’s guidance for full year 2018.
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) risks associated with compliance with environmental laws, (14) the ability to successfully execute, manage and integrate key acquisitions and mergers, (15) failure to obtain or protect intellectual property rights, (16) risks associated with impairment of goodwill or intangibles assets, (17) failure of operating equipment or information technology infrastructure, (18) risks associated with our debt leverage and operating covenants under our debt instruments, (19) risks associated with restrictions contained in our Credit Facility, (20) risks associated with compliance with tax laws, (21) risks associated with the global recession and volatility and disruption in the global financial markets, (22) risks associated with implementation of our ERP system, (23) risks associated with the Svendborg and Stromag acquisitions and integration and other acquisitions, (24) risks associated with certain minimum purchase agreements we have with suppliers, (25) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (26) risks associated with interest rate swap contracts, (27) risks associated with our exposure to renewable energy markets, (28) risks related to regulations regarding conflict minerals, (29) risks related to restructuring and plant consolidations, (30) risks related to our pending acquisition of Fortive A&S, including (a) the possibility that the conditions to the consummation of the proposed transaction will not be satisfied, (b) failure to obtain, delays in obtaining or adverse conditions related to obtaining stockholder or regulatory approvals, (c) the ability to obtain the anticipated tax treatment of the proposed transaction and related proposed transactions, (d) risks relating to any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses and future prospects, (e) the possibility that we may be unable to achieve expected synergies and operating efficiencies in connection with the proposed transaction within the expected time-frames or at all and to successfully integrate Fortive A&S, (f) expected or targeted future financial and operating performance and results, (g) operating costs, customer loss and business disruption (including, without limitation,
difficulties in maintain relationships with employees, customers, clients or suppliers) being greater than expected following the proposed transaction, (h) failure to consummate or delay in consummating the proposed transaction for other reasons, (i) our ability to retain key executives and employees, (j) slowdowns or downturns in economic conditions generally and in the markets Fortive A&S’s businesses participate specifically, (k) slowdowns or downturns in the industrial economy, (l) lower than expected investments and capital expenditures in equipment that utilizes components produced by us or Fortive A&S, (m) lower than expected demand for our or Fortive A&S’s repair and replacement businesses, (n) our relationships with strategic partners, (o) the presence of competitors with greater financial resources than us and their strategic response to our products, (p) our ability to offset increased commodity and labor costs with increased prices, (q) our ability to successfully integrate the merged assets and the associated technology and achieve operational efficiencies, and (r) the integration of Fortive A&S being more difficult, time-consuming or costly than expected and (31) 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 SEC or in materials incorporated therein by reference. Except as required by applicable law, Altra Industrial Motion Corp. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise. AIMC-E
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of Altra. However, Fortive, Altra and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders of Altra in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Fortive may be found in its Annual Report on Form 10-K filed with the SEC on February 28, 2018 and its definitive proxy statement relating to its 2018 Annual Meeting filed with the SEC on April 16, 2018. Information about the directors and executive officers of Altra may be found in its Annual Report on Form 10-K filed with the SEC on February 23, 2018, its definitive proxy statement relating to its 2018 Annual Meeting filed with the SEC on March 23, 2018 and its preliminary proxy statement relating to the proposed transaction filed with the SEC on May 8, 2018.
CONTACT:
Altra Industrial Motion Corp.
Christian Storch, Chief Financial Officer
781-917-0541
Christian.storch@altramotion.com
Second Quarter 2018 Results Exhibit 99.2
Live Webcast July 26, 2018 at 10:00 AM ET 877-407-8293 Domestic 201-689-8349 International Webcast at www.altramotion.com Replay Through August 9, 2018 877-660-6853 Domestic 201-612-7415 International Conference ID: # 13681715 www.altramotion.com Q2 2018 Conference Call Details
SEC Disclosure Rules Additional Information This communication does not constitute an offer to buy, or a solicitation of an offer to sell, any securities of Fortive Corporation (“Fortive”), Stevens Holding Company, Inc. (“Newco”) or Altra Industrial Motion Corp. (“Altra”). In connection with the proposed transaction, Newco filed a registration statement on Form S-4/S-1 containing a prospectus and Altra filed a registration statement on Form S-4 containing a prospectus (together, the “registration statements”) and a preliminary proxy statement on Schedule 14A with the U.S. Securities and Exchange Commission (the “SEC”), in each case on May 8, 2018. Each of Altra and Newco have filed, and expect to file, amendments to these filings before they become effective. Investors and security holders are urged to read the registration statements and Altra’s preliminary proxy statement and any further amendments to these filings when they become available as well as any other relevant documents to be filed with the SEC when they become available because such documents contain or will contain important information about Altra, Fortive, Newco and the proposed transaction. Altra’s preliminary proxy statement, the registration statements and any further amendments to these filings as well as any other relevant documents relating to the proposed transaction can be obtained free of charge from the SEC’s website at www.sec.gov. Such documents can also be obtained free of charge from Fortive upon written request to Fortive Corporation, Investor Relations, 6920 Seaway Blvd., Everett, WA 98203, or by calling (425) 446-5000 or upon written request to Altra Industrial Motion Corp., Investor Relations, 300 Granite St., Suite 201, Braintree, MA 02184, or by calling (781) 917-0527. Participants in the Solicitation This communication is not a solicitation of a proxy from any security holder of Altra. However, Fortive, Altra and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from stockholders of Altra in connection with the proposed transaction under the rules of the SEC. Information about the directors and executive officers of Fortive may be found in its Annual Report on Form 10-K filed with the SEC on February 28, 2018 and its definitive proxy statement relating to its 2018 Annual Meeting filed with the SEC on April 16, 2018. Information about the directors and executive officers of Altra may be found in its Annual Report on Form 10-K filed with the SEC on February 23, 2018, its definitive proxy statement relating to its 2018 Annual Meeting filed with the SEC on March 23, 2018 and its preliminary proxy statement relating to the proposed transaction filed with the SEC on May 8, 2018.
Safe Harbor Statement Cautionary Statement Regarding Forward Looking Statements 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, the statements under “Business Outlook,” our expectations regarding our tax rate, our expectations regarding our acquisition of Fortive’s A&S Platform, and the Company’s guidance for full year 2018. 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) risks associated with compliance with environmental laws, (14) the ability to successfully execute, manage and integrate key acquisitions and mergers, (15) failure to obtain or protect intellectual property rights, (16) risks associated with impairment of goodwill or intangibles assets, (17) failure of operating equipment or information technology infrastructure, (18) risks associated with our debt leverage and operating covenants under our debt instruments, (19) risks associated with restrictions contained in our Credit Facility, (20) risks associated with compliance with tax laws, (21) risks associated with the global recession and volatility and disruption in the global financial markets, (22) risks associated with implementation of our ERP system, (23) risks associated with the Svendborg and Stromag acquisitions and integration and other acquisitions, (24) risks associated with certain minimum purchase agreements we have with suppliers, (25) risks associated with our exposure to variable interest rates and foreign currency exchange rates, (26) risks associated with interest rate swap contracts, (27) risks associated with our exposure to renewable energy markets, (28) risks related to regulations regarding conflict minerals, (29) risks related to restructuring and plant consolidations, (30) risks related to our pending acquisition of Fortive A&S, including (a) the possibility that the conditions to the consummation of the proposed transaction will not be satisfied, (b) failure to obtain, delays in obtaining or adverse conditions related to obtaining stockholder or regulatory approvals, (c) the ability to obtain the anticipated tax treatment of the proposed transaction and related proposed transactions, (d) risks relating to any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses and future prospects, (e) the possibility that we may be unable to achieve expected synergies and operating efficiencies in connection with the proposed transaction within the expected time-frames or at all and to successfully integrate Fortive A&S, (f) expected or targeted future financial and operating performance and results, (g) operating costs, customer loss and business disruption (including, without limitation, difficulties in maintain relationships with employees, customers, clients or suppliers) being greater than expected following the proposed transaction, (h) failure to consummate or delay in consummating the proposed transaction for other reasons, (i) our ability to retain key executives and employees, (j) slowdowns or downturns in economic conditions generally and in the markets Fortive A&S’s businesses participate specifically, (k) slowdowns or downturns in the industrial economy, (l) lower than expected investments and capital expenditures in equipment that utilizes components produced by us or Fortive A&S, (m) lower than expected demand for our or Fortive A&S’s repair and replacement businesses, (n) our relationships with strategic partners, (o) the presence of competitors with greater financial resources than us and their strategic response to our products, (p) our ability to offset increased commodity and labor costs with increased prices, (q) our ability to successfully integrate the merged assets and the associated technology and achieve operational efficiencies, and (r) the integration of Fortive A&S being more difficult, time-consuming or costly than expected and (31) 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 SEC or in materials incorporated therein by reference. Except as required by applicable law, Altra Industrial Motion Corp. does not intend to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise.
Executive Overview Q2 Financial Review Market Review Q&A Agenda and Speakers Carl Christenson Chairman & Chief Executive Officer Christian Storch Vice President & Chief Financial Officer
Achieves record EPS; Raising FY2018 guidance as growth momentum continues 6.2% increase in net sales to $237.3 million; 2.9% organic growth Net income increased 23.4% to $19.0 million, or $0.65 per diluted share, from $15.4 million, or $0.53 per diluted share, in the second quarter of 2017. Non-GAAP net income grew 25.3% to $20.8 million, or $0.71 per diluted share, from $16.6 million, or $0.57 per diluted share, a year ago.* Fortive A&S Business integration on track; Expect to close on acquisition in fourth quarter Second-Quarter 2018 Highlights
Q2 2018 Financial Highlights * Non-GAAP measure Q2 2018 Q2 2017 Sales $237.3 $223.4 Total 6.2% Organic Growth 2.9% FX 3.3% GAAP Diluted EPS $0.65 $0.53 Non-GAAP Diluted EPS* $0.71 $0.56999999999999995 Non-GAAP OPI Margin* 0.12 0.112
Balance Sheet Highlights Paying down debt remains a priority No share re-purchases in Q2 (amounts in millions) Q2 2018 Q2 2017 Cash $38.1 $59 Total Debt $261.39999999999998 $308.39999999999998 Total Debt less Cash $223.29999999999998 0.35099025463690664 $249.39999999999998 0.40342931090262046 Equity $412.9 0.64900974536309342 $368.8 0.59657068909737943 Equity plus Debt, less Cash $636.19999999999993 100.0% $618.20000000000005 100.0% Shares Outstanding 29.1 29.3 Net Debt 0.35099025463690664 Equity 0.64900974536309342
2018 Guidance: Raising Top and Bottomline Expectations Sales $920 to $935 Million GAAP Diluted EPS $2.06 to $2.11 Non-GAAP Diluted EPS * $2.45 to $2.55 Capital Expenditures $28 to $30 Million Depreciation and Amortization $36 to $38 Million Tax Rate 23% to 25% * See Appendix
End Market Review Distribution Sales up double digits year over year Strength in global economy Turf and Garden Sales flat with year-ago quarter Expect 2018 sales to be up from strong 2017 and 2016 Farm and Ag YOY decrease due to difficult comparison with Q2’17 Sales up for 1H’18; Expect sales increase for full year 2018 Material Handling Robust sales across forklift, cranes and hoist markets Demand driven by rebound in oil & gas and metals markets Energy Sales up slightly Strength in oil & gas, partially offset by weakness in power generation and wind Wind sales strong in June; expect continued growth in Q3 Metals Market Double-digit sales growth due to strength in overall industry and steel tariffs Expect strong 2018 Mining Double-digit sales growth due to mining distribution demand Continue to see signs of new equipment builds for mine expansions
Summary Capitalizing on strength across virtually all end markets Seeing benefits of strategic initiatives; Significant upside for bottom-line improvement Creating organic growth opportunities through product development activities Creating premium global industrial company through combination with Fortive A&S businesses Raising guidance for full year 2018
Discussion of Non-GAAP Measures * As used in this release and the accompanying slides posted on the Company's website, non-GAAP diluted earnings per share, non-GAAP income from operations and non-GAAP net income are each calculated using either net income or income from operations that excludes acquisition related costs, restructuring costs, and other income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP gross profit is calculated using gross profit that excludes income or charges that management does not consider to be directly related to the Company's core operating performance. Non-GAAP diluted earnings per share is calculated by dividing non-GAAP net income by GAAP weighted average shares outstanding (diluted). Non-GAAP free cash flow is calculated by deducting purchases of property, plant and equipment from net cash flows from operating activities. Non-GAAP operating working capital is calculated by deducting accounts payable from net trade receivables plus inventories. Altra believes that the presentation of non-GAAP net income, non-GAAP income from operations, non-GAAP gross profit, non-GAAP diluted earnings per share, non-GAAP free cash flow and non-GAAP operating working capital provides important supplemental information to management and investors regarding financial and business trends relating to the Company's financial condition and results of operations.
Appendix Non-GAAP Measures * Appendix Non-GAAP Measures * Non-GAAP Net Income (amounts in millions) Q2 2018 Q2 2017 Reported Net Income $19 $15.4 Restructuring and consolidation costs 0.6 1.2 Supplier warranty settlement -2 - Acquisition related expenses 1.8 0.6 Tax impact of above adjustments 1.3 -1 -0.5 -2 Non-GAAP net income $20.8 $16.600000000000001 Non-GAAP diluted earnings per share $0.71 $0.56999999999999995 (1) Tax impact is calculated by multiplying the estimated effective tax rate for the period of 24.2% by restructuring and consolidation costs. Acquisition related expenses in the quarter are not tax deductible, therefore the tax impact has been eliminated. The supplier warranty settlement income is not taxable in the local jurisdiction, therefore, no tax impact has been assumed. (2) tax impact is calculated by multiplying the estimated effective tax rate, 29.9% by the above items Non-GAAP Income from operations (amounts in millions) Q2 2018 Q2 2017 Reported Income from Operations $28 $23.1 Restructuring and consolidation costs 0.6 1.2 Supplier warranty settlement -2 - Amortization of inventory fair value adjustment - - Acquisition related expenses 1.8 0.6 Non-GAAP income from operations $28.5 $24.900000000000002 Free Cash Flow (amounts in millions) Q2 2018 Q2 2017 Operating Cash Flow $25.400000000000002 $23 Less Capex -7.9 -7.1000000000000005 Free Cash Flow $17.5 $15.899999999999999 *Reconciliation of 2018 Non-GAAP Net Income and Diluted EPS Guidance (Amounts in millions except per share information) Fiscal Year 2018 Fiscal Year 2018 Diluted earnings per share Net Income per Share Diluted $60.0 - $61.4 $2.06 - $2.11 Restructuring and consolidation costs 2.0 - 4.0 Acquisition related expenses 7.2 Loss on settlement of pension plan 5.0999999999999996 Supplier warranty settlement -2 Tax impact of above adjustments** (1.0) - (1.5) Non-GAAP Net Income $71.3 - $74.2 $2.45 - $2.55 * Adjustments are pre tax, with net tax impact listed separatrely ** Tax impact is calculated by multiplying the effective tax rate for the period of 26.0% by the above items. Non-GAAP Operating Working Capital (amounts in millions) Q2 2018 Q2 2017 Accounts Receivable $146.4 $135.5 Inventories 149.6 145.6 Accounts Payable -62.9 -68 Operating Working Capital $233.1 $213.10000000000002
Appendix Non-GAAP EBITDA Reconciliation * EBITDA Reconciliation (amounts in millions) Q3 2017 Q4 2017 Q1 2018 Q2 2018 LTM Net Income $13.3 $12.4 $9 $19 $53.7 Asset Impairment and Other, Net 0.13600000000000001 1 0 0.3 1.4360000000000002 Taxes 5.5 3.9 3.9 7.3 20.6 Interest Expense, net 1.8 2.2000000000000002 1.8 2.1 7.9 Depreciation Expense 6.9 6.7000000000000011 6.9 6.9 27.4 Amortization Expense 2.3999999999999995 2.4000000000000004 2.5 2.4000000000000004 9.6999999999999993 Acquisition related expenses 0.1 0.5 5.4 1.8 7.8 Loss on partial settlement of pension plans 0 1.7 5.0999999999999996 0 6.8 Stock Compensation Expense 1.2999999999999996 0.7999999999999996 1.3 1.4000000000000001 4.8 Supplier warranty settlement 0 0 0 -2 -2 Restructuring and consolidation expense 0.7 0.4 0.9 0.6 2.6 Adjusted EBITDA $32.136000000000003 $32 $36.799999999999997 $39.799999999999997 $140.73600000000002
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