QUINCY, Mass., Aug. 4, 2008 (PRIME NEWSWIRE) -- Altra Holdings, Inc. (Nasdaq:AIMC), a leading global supplier of clutch brakes, couplings, gearing, belted drives and power transmission components, today announced unaudited financial results for the second quarter of 2008.
Financial Highlights
* Quarterly net sales increased 9.4% year-over-year to a record
$167.9 million. Adjusted for acquisitions, sales grew 7.3% for
the second quarter of 2008.
* Recurring diluted EPS from continuing operations was $0.39 for
the second quarter compared with $0.29 in the prior-year
quarter, an increase of 34.5% (GAAP diluted EPS from continuing
operations was $0.38).
* Income from operations reached 13.1% of net sales, an
improvement of 150 basis points.
* Improved leverage to 2.35x, net-debt to adjusted EBITDA.
* Raised financial guidance for 2008.
Comments on the Second Quarter
"We are extremely pleased to deliver another quarter of record financial results to our shareholders," said Michael L. Hurt, Chairman and CEO. "Our impressive second quarter growth was driven by strong sales to our global OEM's, target market successes and continued strong demand from most of our end markets. Both, our record operating margin and record recurring income from continuing operations for the quarter were the result of sales leverage coupled with low-cost country sourcing, productivity improvements, and our ability to pass through material cost increases. Additionally, we continued to strengthen our balance sheet by repurchasing $15 million worth of our 9% Senior Secured notes and improving our leverage ratio to 2.35x (net debt to adjusted EBITDA)."
Financial Results
Net sales for the second quarter of 2008 increased 9.4% to a record $167.9 million from $153.5 million in the second quarter of 2007. The growth rate, adjusted for acquisitions, was 7.3% for the quarter. Net sales for the six months ended June 28, 2008 increased 15.7% to $331.1 million from $286.2 million for the first six months of 2007. The growth rate adjusted for acquisitions for the first half of the year was 6.0%.
Income from operations for the second quarter of 2008 increased 23.6% to $22.0 million from $17.8 million in the second quarter of 2007. Excluding restructuring charges and OPEB curtailment gain, income from operations for the second quarter of 2008 was $22.2 million, or 13.2% of sales. Income from operations for the first six months increased 29.5% to $42.6 million from $32.9 million in the first six months of 2007. Excluding restructuring charges and OPEB curtailment gain, income from operations for the first six months of 2008 was $43.5 million, or 13.2% of sales.
Reported net income for the second quarter was $9.9 million, or $0.38 per diluted share, compared with $4.8 million, or $0.21 per diluted share, for the second quarter of 2007. Reported net income for the six-month period of 2008 was $18.4 million, or $0.71 per diluted share, compared with $8.6 million, or $0.37 per diluted share, for the six-month period of 2007.
Recurring diluted earnings per share from continuing operations for the second quarter of 2008 grew to $0.39 per diluted share from $0.29 per diluted share in the second quarter of 2007. Recurring diluted earnings per share from continuing operations for the first half of 2008 grew to $0.76 per diluted share from $0.58 per diluted share in the first half of 2007.
Business Outlook
"As we head into the second half of the year, we are optimistic about our performance for the remainder of 2008," said Hurt. "Currently, we continue to see solid bookings and our sales and marketing teams are successfully closing new business opportunities. We expect that demand across our diversified end markets, including aerospace and defense, metals, mining and power generation, should help to sustain our momentum in the second half of the year. As a result, we are raising 2008 full-year guidance."
For 2008, the company is forecasting net sales to be in the range of $640 million to $650 million, EBITDA to be in the range of $102 to $106 million, and diluted earnings per share in the range of $1.28 to $1.37. Altra Holdings expects capital expenditures in the range of $17.0 to $19.0 million, depreciation and amortization in the range of $21.0 to $23.0 million and a tax rate of approximately 35.0%.
Altra Holdings, Inc.
(Unaudited)
------------------ ------------------
Condensed Statements of
Income Data: Quarter Ended Year to Date Ended
In Thousands of Dollars, June 28, June 30, June 28, June 30,
except per share amounts 2008 2007 2008 2007
-------- -------- -------- --------
Net sales $167,893 $153,528 $331,075 $286,234
Cost of sales 117,506 110,411 232,890 205,069
-------- -------- -------- --------
Gross profit $ 50,387 $ 43,117 $ 98,185 $ 81,165
Gross profit as a percent
of net sales 30.0% 28.1% 29.7% 28.4%
Selling, general &
administrative expenses 26,448 23,578 51,161 44,405
Research and development
expenses 1,766 1,565 3,497 2,859
OPEB curtailment gain (169) -- (169) --
Restructuring expense 335 198 1,068 991
-------- -------- -------- --------
Income from operations $ 22,007 $ 17,776 $ 42,628 $ 32,910
Income from operations as
a percent of net sales 13.1% 11.6% 12.9% 11.5%
Interest expense, net 7,713 10,726 15,154 19,874
Other income (853) 131 (1,479) 84
-------- -------- -------- --------
Income from continuing
operations before income
taxes $ 15,147 $ 6,919 $ 28,953 $ 12,952
Income taxes 5,278 2,583 10,127 4,848
-------- -------- -------- --------
Income tax rate 34.8% 37.3% 35.0% 37.4%
Net income from continuing
operations 9,869 4,336 18,826 8,104
Net loss from discontinued
operations, net of taxes of
$124 for 2008 and $220
for 2007 -- 466 (397) 466
-------- -------- -------- --------
Net income $ 9,869 $ 4,802 $ 18,429 $ 8,570
======== ======== ======== ========
Weighted Average common
shares outstanding
Basic 25,476 22,250 25,474 22,066
Diluted 26,121 23,268 26,120 23,075
Earnings per share - Basic
Net income from continuing
operations $ 0.39 $ 0.20 $ 0.74 $ 0.37
Net income (loss) from
discontinued operations -- 0.02 (0.02) 0.02
-------- -------- -------- --------
Net income $ 0.39 $ 0.22 $ 0.72 $ 0.39
Earnings per share - Diluted
Net income from continuing
operations $ 0.38 $ 0.19 $ 0.72 $ 0.35
Net income (loss) from
discontinued operations -- 0.02 (0.01) 0.02
-------- -------- -------- --------
Net income $ 0.38 $ 0.21 $ 0.71 $ 0.37
Other Financial Data:
Depreciation & amortization 5,395 6,067 10,935 10,532
Capital expenditures 3,147 3,215 7,641 4,249
Reconciliation of Recurring
Net Income:
Net income from continuing
operations $ 9,869 $ 4,336 $ 18,826 $ 8,104
Restructuring charges,
net of tax 218 124 694 620
Premium & deferred financing
expense eliminated on
redeemed 11.25% bonds,
net of tax -- 1,520 75 3,895
Premium & deferred financing
expense eliminated on
redeemed 9% bonds,
net of tax 432 -- 431 --
OPEB curtailment gain
related to restructuring
activities, net of tax (110) -- (110) --
Gain on the sale of
securities, net of tax (141) -- (140) --
Amortization of inventory
fair value adjustment,
net of tax -- 409 -- 409
Accelerated vesting for
stock compensation
(for ex director),
net of tax -- 180 -- 180
Bridge financing fee on TB
Woods acquisition, net
of tax -- 282 -- 282
Deferred financing expense
eliminated on pay down of
TB Wood's revolving credit
facility, net of tax -- -- 100 --
-------- -------- -------- --------
Recurring net income $ 10,268 $ 6,851 $ 19,876 $ 13,490
======== ======== ======== ========
Recurring diluted EPS $ 0.39 $ 0.29 $ 0.76 $ 0.58
======== ======== ======== ========
Condensed Balance Sheets (Unaudited)
In Thousands of Dollars June 28, December 31,
2008 2007
Assets:
Current Assets
Cash and cash equivalents 43,232 45,807
Trade Receivables, net 92,672 73,248
Inventories, net 104,963 101,835
Deferred income taxes 8,689 8,286
Receivable from sale of Electronics -- 17,100
Prepaid expenses and other 7,845 5,578
Assets held for sale 4,676 4,728
------------ ------------
Total current assets 262,077 253,015
Property, plant and equipment, net 113,745 113,043
Intangible assets, net 86,479 88,943
Goodwill 115,352 114,979
Deferred income taxes 141 231
Other assets 5,052 6,747
------------ ------------
Total assets $ 582,846 $ 580,525
============ ============
Liabilities and stockholders' equity
Current liabilities
Accounts payable 42,941 41,668
Accrued payroll 15,914 16,988
Accruals and other liabilities 21,954 22,001
Deferred income taxes 8,060 8,060
Current portion of long-term debt 3,419 2,667
------------ ------------
Total current liabilities 92,288 91,384
Long-term debt, less current
portion and net of unaccreted
discount and premium 272,351 291,399
Deferred income taxes 24,910 24,490
Pension liabilities 12,260 13,431
Other post retirement benefits 2,634 3,170
Long-term taxes payable 5,852 5,911
Other long-term liabilities 4,366 4,308
------------ ------------
Total stockholders' equity 168,185 146,432
------------ ------------
Total liabilities and
stockholders' equity $ 582,846 $ 580,525
============ ============
The company will conduct an investor conference call on August 5, 2008 at 11:00 AM EDT to discuss its unaudited second-quarter 2008 financial results. The public is invited to listen to the conference call by dialing 800-895-0198 domestically or 785-424-1053 for international access and asking to participate in Conference ID# ALTRA. Also, the company has posted slides on its web site at http://www.altramotion.com in the Investor Relations Section in the Events & Presentations tab to help the participants better follow the discussion. A replay of the recorded conference call will be available until midnight on August 12, 2008. To listen to the replay, dial 800-283-4783 domestically or 402-220-0859 for international access.
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 40 product lines, with production facilities in eight 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 and Warner Linear.
The Altra Holdings, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=4038
Discussion of Non-GAAP Measures
As used in this news release and the accompanying slides posted on its website, non-GAAP recurring diluted earnings per share is calculated using net income from continuing operations that excludes premiums and interest expense associated with extinguished debt, OPEB curtailment gain, and restructuring charges that management does not consider to be directly related to the company's core operating performance. Non-GAAP recurring diluted net income per share is calculated by dividing non-GAAP recurring net income by GAAP weighted average shares outstanding (diluted).
Altra believes that the presentation of non-GAAP recurring net income, non-GAAP recurring diluted earnings per share, and adjusted EBITDA provides important supplemental information to management and investors regarding financial and business trends relating to the company's financial condition and results of operations. For further information regarding why Altra believes that these non-GAAP measures provide useful information to investors, and some of the limitations associated with the use of these measures, please refer to the company's Current Report on Form 8-K filed today with the SEC. The Form 8-K is available on the SEC's website at http://www.sec.gov.
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. Such statements are based on financial data, market assumptions and business plans 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. 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 U.S. and abroad, (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, (7) increased costs of raw materials used in our products, (8) product liability claims, (9) work stoppages and other labor issues, (10) changes in environmental, tax and other laws and changes in the enforcement of laws, (11) loss of key management and other personnel, (12) changes in pension and retirement liabilities, (13) the ability to achieve business plans, including with respect to an uncertain economic environment; (14) the ability to successfully execute, manage and integrate key acquisitions and mergers (15) failure to obtain or protect intellectual property rights, (16) failure of operating equipment or information technology infrastructure and (17) risks associated with our debt leverage and operating covenants under our debt instruments, (18) as well as other risks, uncertainties and other factors described in the company's Form 10-Q, 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. Altra Holdings, Inc. is under no obligation to, and expressly disclaims any obligation to, update or alter its forward looking statements, whether as a result of new information, future events or otherwise.
AIMC-E