Altra Industrial Motion Corp. (Nasdaq: AIMC) (“Altra” or the
“Company”), a premier global manufacturer and supplier of motion
control, power transmission and automation products, announced
today that it has entered into a definitive agreement to be
acquired by Regal Rexnord Corporation (“Regal Rexnord”) for
approximately $5.0 billion on an enterprise value basis. Under the
terms of the agreement, Altra shareholders will receive $62.00 in
cash for each share of Altra common stock, representing a 54%
premium to the closing price of the Company’s common stock on
October 26, 2022. Regal Rexnord has fully committed debt financing
and there are no financing conditions associated with the
transaction.
“The sale of Altra to Regal Rexnord will provide
our shareholders with immediate and substantial cash value, as well
as a compelling premium, and the Board of Directors has agreed that
this transaction is in the best interests of our shareholders”,
said Carl Christenson, Chairman and CEO of Altra. “I am extremely
proud of the company we have built and I am excited to announce
this new chapter for Altra, knowing that the company will have a
great home within the Regal Rexnord organization.”
Altra’s Board of Directors has approved the
merger agreement and the transaction is expected to close in the
first half of 2023, subject to customary closing conditions,
including approval by Altra shareholders and receipt of regulatory
approvals. Upon completion of the transaction, Altra shares will no
longer be listed on any public market.
Preliminary Financial
Results
Revenue for the third quarter 2022 was $466.3
million, down less than 1%, compared to $469.3 million in the third
quarter 2021. Organic revenue growth* was up 1.9%, after adjusting
for FX and the acquisition of Nook Industries. Included in the Q3
2021 net sales are revenues of approximately $41.3 million related
to the Jacobs Vehicle Systems business that was divested by the
Company on April 8, 2022. Net Income for the third quarter of 2022
was $33.6 million, or 7.2% of revenues. Non-GAAP adjusted EBITDA*
was $92.1 million, or 19.8% of revenues. The Company ended the
quarter with total gross debt of $1.06 billion and net debt* of
approximately $860 million. The Company now plans to release its
full 2022 unaudited third quarter financial results before the
market opens on Monday, October 31, 2022. The previously announced
conference call scheduled for Thursday, November 3, 2022, at 11:00
a.m. Eastern Time will be cancelled.
* Represents a non-GAAP financial measure.
Additional information on non-GAAP financial measures presented
herein is available at the end of this release.
Financial Disclosure
Advisory
All financial results for the third quarter 2022
and related comparisons to prior periods included in this release
are preliminary, unaudited, based on the Company’s estimates and
prepared prior to the completion of the Company’s financial
statement close process. Final results for third quarter 2022,
which will be reported on a Quarterly Report on Form 10-Q, may vary
from the information in this press release. In addition, any
statements regarding the Company’s estimated financial performance
for the third quarter of 2022 do not present all information
necessary for an understanding of the Company’s financial condition
and results of operations as of and for the quarter ended September
30, 2022.
Financial Guidance
Due to the announced transaction, the Company
will no longer update financial guidance.
Advisors
In connection with the transaction, Goldman
Sachs & Co. LLC is serving as sole financial advisor and
Cravath, Swaine & Moore LLP is serving as legal advisor to
Altra.
About Altra Industrial Motion
Corp.
Altra Industrial Motion Corp. is a premier
industrial global manufacturer and supplier of highly engineered
motion control, automation, and power transmission systems and
components. Altra’s portfolio consists of 26 well-respected brands
including Bauer Gear Motor, Boston Gear, Kollmorgen, Portescap,
Stromag, Svendborg Brakes, TB Wood’s, Thomson and Warner Electric.
Headquartered in Braintree, Massachusetts, Altra has over 9,000
employees and 47 production facilities in 17 countries around the
world. AIMC-G.
Contact:Investor
Relations781-917-0600E-mail: ir@altramotion.com
*Reconciliation of Organic Sales and Organic
Sales Growth:
|
Quarter Ended September 30, 2022 |
|
Results ($) |
|
|
Growth (%) |
Net sales and net sales growth |
$ |
466.3 |
|
|
-0.6% |
Less: unfavorable foreign
currency translation |
|
(23.5 |
) |
|
-5.0% |
Less: Nook acquisition |
|
11.9 |
|
|
2.5% |
Organic sales and organic
sales growth* |
$ |
477.9 |
|
|
1.9% |
Included in the Q3 2021 net sales are revenues of approximately
$41.3 million related to the Jacobs Vehicle Systems business that
was divested by the Company on April 8, 2022.
*Reconciliation of Non-GAAP Adjusted EBITDA and
Non-GAAP Adjusted EBITDA Margin:
|
Quarter Ended September 30, 2022 |
|
Net income |
$ |
33.6 |
|
Net income from operations as
a percent of net sales |
|
7.2 |
% |
Gain on foreign currency and
other, net |
|
(1.1 |
) |
Tax expense |
|
11.9 |
|
Interest expense |
|
13.7 |
|
Depreciation expense |
|
9.5 |
|
Acquisition related
expenses |
|
0.1 |
|
Acquisition related
amortization expense |
|
13.6 |
|
Stock compensation
expense |
|
3.9 |
|
Restructuring costs |
|
3.9 |
|
Impairment charges |
|
3.0 |
|
Non-GAAP Adjusted EBITDA* |
$ |
92.1 |
|
Non-GAAP Adjusted EBITDA as a
percent of net sales* |
|
19.8 |
% |
*Reconciliation of Net Debt:
|
September 30, 2022 |
|
Total gross debt |
$ |
1,058.1 |
|
Cash and cash equivalents |
|
(198.2 |
) |
Net Debt* |
$ |
859.9 |
|
*Discussion of Non-GAAP Financial
Measures
The non-GAAP financial measures used in this
release are utilized by management in comparing our operating
performance on a consistent basis. We believe that these financial
measures are appropriate to enhance the overall understanding of
our underlying operating performance trends compared to historical
and prospective periods and our peers. We believe that these
measures provide important supplemental information to management
and investors regarding financial and business trends relating to
the Company’s financial condition and results of operations as well
as insight into the compliance with our debt covenants. Non-GAAP
financial measures should not be considered in isolation from, or
as a substitute for, financial information calculated in accordance
with GAAP. Investors are encouraged to review the reconciliation of
these non-GAAP measures to their most directly comparable GAAP
financial measures. Our industry peers may provide similar
supplemental non-GAAP information with respect to one or more of
these measures, although they may not use the same or comparable
terminology and may not make identical adjustments. A
reconciliation of non-GAAP financial measures presented above to
our GAAP results has been provided in the financial tables included
in this press release.
Organic Sales and Organic Sales Growth
Organic Sales in this release are net sales
excluding the impact of foreign currency translation and
acquisitions. Organic Sales can be expressed as a dollar amount or
a percentage rate when describing Organic Sales Growth.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA represent earnings
before interest, taxes, depreciation, acquisition related
amortization, acquisition related costs, restructuring costs,
stock-based compensation, asset impairment and other income or
charges that management does not consider to be directly related to
the Company’s core operating performance.
Non-GAAP Adjusted EBITDA Margin
Non-GAAP Adjusted EBITDA Margin is calculated by
dividing Non-GAAP Adjusted EBITDA by GAAP Net Sales.
Net Debt
Net Debt is calculated by subtracting cash and
cash equivalents from total gross debt.
Additional Information and Where to Find
It
This communication does not constitute an offer
to sell or the solicitation of an offer to buy any securities or
constitute a solicitation of any vote or approval.
In connection with the proposed merger, Altra
will file with the Securities and Exchange Commission (the “SEC”) a
proxy statement on Schedule 14A. Promptly after filing its
definitive proxy statement with the SEC, Altra intends to mail the
definitive proxy statement and a proxy card to each stockholder
entitled to vote at the special meeting relating to the proposed
merger. INVESTORS AND STOCKHOLDERS OF ALTRA ARE URGED TO READ THE
PROXY STATEMENT (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO)
AND OTHER DOCUMENTS RELATING TO THE PROPOSED MERGER THAT WILL BE
FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER. Stockholders will be able to obtain free copies of
the proxy statement and other documents containing important
information about Altra (once such documents are filed with the
SEC), through the website maintained by the SEC at
http://www.sec.gov. The proxy statement and other documents (when
they are available) can also be obtained free of charge from Altra
upon written request to Altra’s Investor Relations Department, 300
Granite St., Suite 201, Braintree, MA 02184 or by calling
781-917-0527.
Participants in the
SolicitationAltra and its directors and executive officers
may be deemed to be participants in the solicitation of proxies
from Altra’s stockholders in connection with the proposed merger.
Information about the directors and executive officers of Altra is
set forth in its proxy statement for its 2022 annual meeting of
stockholders on Schedule 14A filed with the SEC on March 24, 2022,
and its Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, which was filed with the SEC on February 28,
2022. Other information regarding the participants in the proxy
solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement and other relevant materials to be filed with
the SEC when they become available.
Cautionary Statement Regarding
Forward-Looking Statements
This communication contains forward‑looking
statements, within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Altra intends such forward-looking statements
to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform
Act of 1995 and include this statement for purposes of complying
with these safe harbor provisions, which reflect Altra’s current
estimates, expectations and projections about Altra’s future
results, performance, prospects and opportunities. Forward-looking
statements include, among other things, the information concerning
Altra’s possible future results of operations including revenue,
costs of goods sold, gross margin, future profitability, future
economic improvement, business and growth strategies, financing
plans, expected leverage levels, Altra’s competitive position and
the effects of competition, the projected growth of the industries
in which we operate, and Altra’s ability to consummate the proposed
merger and other strategic transactions. Forward-looking statements
include statements that are not historical facts and can be
identified by forward-looking words such as “anticipate”,
“believe”, “continue”, “could”, “estimate”, “expect”, “forecast”,
“intend”, “plan”, “may”, “project”, “should”, “will”, “would”, and
similar expressions or variations. These forward-looking statements
are based upon information currently available to Altra and are
subject to a number of risks, uncertainties, and other factors that
could cause Altra’s actual results, performance, prospects, or
opportunities to differ materially from those expressed in, or
implied by, these forward-looking statements.
The following factors, among others, could cause
actual results and future events to differ materially from those
set forth or contemplated in the forward-looking statements:
|
(i) |
Altra’s proposed merger with Regal Rexnord may not be completed in
a timely manner or at all, including the risk that any required
regulatory approvals are not obtained, are delayed or are subject
to unanticipated conditions that could adversely affect Altra or
the expected benefits of the proposed merger or that the approval
of Altra’s stockholders is not obtained; |
|
(ii) |
the ability of Regal Rexnord to obtain debt financing in connection
with the proposed merger; |
|
(iii) |
the possibility that any or all of the various conditions to the
consummation of the merger may not be satisfied or waived,
including the failure to receive any required regulatory approvals
from any applicable governmental entities (or any conditions,
limitations or restrictions placed on such approvals); |
|
(iv) |
the occurrence of any event, change or other circumstance that
could give rise to the termination of the merger, including in
circumstances which would require Altra to pay a termination fee or
other expenses; |
|
(v) |
the effect of the announcement or pendency of the merger on Altra’s
ability to retain and hire key personnel, its ability to maintain
relationships with its customers, suppliers and others with whom it
does business, or its operating results and business
generally; |
|
(vi) |
risks related to diverting management’s attention from Altra’s
ongoing business operations; |
|
(vii) |
the risk that shareholder litigation in connection with the merger
may result in significant costs of defense, indemnification and
liability; and |
|
(viii) |
other factors discussed in the “Risk Factors” and the “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of Altra’s Annual Report on Form 10-K for the
year ended December 31, 2021, filed with the SEC on February 28,
2022, and risks that may be described in Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and other filings by Altra with
the SEC. |
In addition to the risks described above, other
unknown or unpredictable factors also could affect Altra’s results.
As a result of these factors, we cannot assure you that the
forward‑looking statements in this communication will prove to be
accurate. Furthermore, if our forward‑looking statements prove to
be inaccurate, the inaccuracy may be material. In light of the
significant uncertainties in these forward‑looking statements, you
should not regard these statements as a representation or warranty
by us or any other person that we will achieve our objectives and
plans in any specified time frame, or at all. The forward‑looking
statements in this communication represent our views as of the date
of this communication. We anticipate that subsequent events and
developments may cause our views to change. However, while we may
elect to update these forward‑looking statements at some point in
the future, we undertake no obligation to publicly update any
forward‑looking statements, whether as a result of new information,
future events or otherwise, except as required by law. You should,
therefore, not rely on these forward‑looking statements as
representing our views as of any date subsequent to the date of
this communication.
You should read this communication and the
documents that we reference in this communication completely and
with the understanding that our actual future results may be
materially different from what we expect. We qualify all of our
forward‑looking statements by these cautionary statements.
Grafico Azioni Altra Industrial Motion (NASDAQ:AIMC)
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