OREANDA-NEWS. 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 fourth quarter and year ended December 31, 2015.

Financial Highlights

  • Fourth-quarter 2015 net sales were $173.6 million, compared with $192.0 million in the fourth quarter of 2014, a decrease of 9.6%. The decrease in net sales was driven by an organic sales decline of 6.6% and the unfavorable impact from foreign exchange of 3.8%, partially offset by a 0.8% favorable impact from pricing. 
  • Fourth-quarter gross margin increased 80 basis points to 31.2% from 30.4% a year ago despite the sales decline as a result of the success of the Company's margin improvement and strategic pricing initiatives. 
  • Fourth-quarter net income was $6.1 million, or $0.23 per diluted share, compared with $9.1 million, or $0.34 per diluted share, in the fourth quarter of 2014. Non-GAAP net income in the fourth quarter 2015 was $9.3 million, or $0.36 per diluted share, compared with $11.2 million, or $0.42 per diluted share, a year ago.* 
  • Strong cash flows from operations led to a record free cash flows of $63.2 million for the year.* 
  • The Company purchased $3.0 million, or approximately 115,000 shares, of Altra stock during the fourth quarter under its $50 million repurchase program. Since the program's inception in May 2014, the Company has purchased approximately $34.9 million, or 1.2 million shares, under the program. 
  • Altra announced the closure of its Changzhou, China facility during the fourth quarter which is expected to be completed during the first quarter of 2016.
  • Reconciliation of Non-GAAP Net Income*:
  Quarter
Ended		   Year to Date
Ended		   Quarter
Ended		   Year to Date
Ended
  December 31, 2015   December 31, 2014
Net income attributable to Altra Industrial Motion Corp. $ 6,107     $ 35,406     $ 9,059     $ 40,167  
               
Restructuring costs 2,220     7,214     124     1,767  
Amortization of inventory fair value adjustment —     —     112     2,376  
Write-off of deferred financing fees 500     500     —     —  
Legal fees associated with pursuit of unfair trade remedy 430     430     —     —  
European workers compensation claim —     —     —     355  
Supplier warranty provision 739     2,808     —     —  
Non-cash impact of partial pension settlement —     —     475     475  
Acquisition related expenses 93     831     2,305     3,204  
Tax impact of above adjustments (775 )   (3,143 )   (902 )   (2,450 )
Tax impact of foreign reorganizations $ —     $ (924 )   $ —     $ 3,758  
Non-GAAP net income* $ 9,314     $ 43,122     $ 11,173     $ 49,652  
Non-GAAP diluted earnings per share* $ 0.36     $ 1.64     $ 0.42     $ 1.83  
               
In Thousands of Dollars, except per share amounts              
  • Reconciliation of Non-GAAP Gross Profit*:
  Quarter
Ended		 Year to Date
Ended		   Quarter
Ended		 Year to Date
Ended
  December 31, 2015 December 31, 2014
Gross Profit $ 54,204   $ 228,463     $ 58,270   $ 248,869  
Gross profit as a percent of net sales 31.2 % 30.6 %   30.4 % 30.4 %
Supplier warranty provision 739   2,808     —   —  
Amortization of inventory fair value adjustment —   —     112   2,376  
Non-GAAP Gross Profit* $ 54,943   $ 231,271     $ 58,382   $ 251,245  
Non-GAAP Profit as a percent of net sales 31.6 % 31.0 %   30.4 % 30.6 %
In Thousands of Dollars, except per share amounts          


Management Comments

"Amid a difficult economic environment, we were pleased with our operating performance during the fourth quarter," said Carl Christenson, Altra's Chairman and CEO. "We achieved an 80 basis point increase in gross margins during the quarter to 31.2% on a 9.6% decrease in sales due to lower raw material costs, outstanding control of other input costs and our successful pricing initiative.  We also made expected progress on our facility consolidation efforts.    We announced the closure of our Changzhou, China facility during the quarter and that closure is now essentially complete.   Adjusted operating income increased 20 basis points during the quarter.  As a result of our bottom-line performance, we generated record free cash flow during the year, allowing us to pay down $25 million on our credit facility and return $32.2 million to shareholders through the dividend and stock repurchase plan."*

Business Outlook
"We expect the decline in global industrial demand to result in lower year-over-year sales in 2016.   However, this affords us the opportunity to take aggressive action to improve our long term operating performance.  We have accelerated our facility consolidation plans and we will have consolidated six sites by the end of the second quarter.   In addition, we have expanded and accelerated our supply chain management efforts and are very excited about the results we are already seeing.   While this is an extremely difficult environment regarding pricing we achieved our three year goal in just over 2 years and still believe that we have some additional, albeit more difficult, opportunity.   Finally, we are really excited by our long term margin potential due to operating leverage when some of our distressed end markets rebound and the impact of the initiatives we are working on," concluded Christenson.

Altra is forecasting sales in the range of $700 to $720 million and non-GAAP diluted EPS in the range of $1.40 to $1.50 for 2016. This guidance is based on foreign exchange rates as of December 31, 2015, which may change. The Company expects its tax rate for the full year to be in the range of 29% to 31% before discrete items. Altra also expects capital expenditures in the range of $20 to $24 million and depreciation and amortization in the range of $30 to $32 million for 2016.